Chapter 7 Bankruptcy: Understanding the Basics

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Understanding the basics of chapter 7 bankruptcy in Central Texas.

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Chapter 7 Bankruptcy:

Chapter 7 Bankruptcy Understanding the Basics

If you are facing foreclosure, your paycheck is being garnished, or you feel like you are drowning in bills, IT MAY BE TIME TO CONSIDER BANKRUPTCY:

If you are facing foreclosure, your paycheck is being garnished, or you feel like you are drowning in bills, IT MAY BE TIME TO CONSIDER BANKRUPTCY Bankruptcy Protection 1

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A chapter 7 bankruptcy can provide you with a fresh start while still protecting your home and your important assets in most cases.

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US Bankruptcy Code 2 Bankruptcy protection is found in the U.S. Bankruptcy Code, meaning that the federal courts have jurisdiction over bankruptcy proceedings

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An individual may file bankruptcy under chapter 7, 11, 12 or 13 of U.S. Bankruptcy Code.

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Chapter 11 -- Typically used by small businesses

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Chapter 12 – Family farmers or fishermen

Used by debtors with significant income and/or valuable non-exempt assets:

Used by debtors with significant income and/or valuable non-exempt assets Chapter 13 – Wage earner plan

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Chapter 7 – Quickest way to a fresh start Simplest and fastest chapter, it is the m ost popular option for individuals

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Chapter 7 Specifics 3 The vast majority of debtors who file chapter 7 are able to retain their assets due to strong exemption laws under state and federal law

Almost all debts are discharged in a Chapter 7 Bankruptcy That means that creditors are forbidden from trying to collect those debts from people who have filed Chapter 7 :

Almost all debts are discharged in a Chapter 7 Bankruptcy That means that creditors are forbidden from trying to collect those debts from people who have filed Chapter 7

Other chapters require debtor to repay debts over time:

Other chapters require debtor to repay debts over time

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The Means Test 4 Debtor must pass means test to file chapter 7

Compares your income to other Texas residents:

Compares your income to other Texas residents

If your income is over the median for your area it becomes more complicated:

If your income is over the median for your area it becomes more complicated

The MEANS TEST is a very complicated form. You need an experienced bankruptcy attorney to assist you complete it.:

The MEANS TEST is a very complicated form. You need an experienced bankruptcy attorney to assist you complete it.

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Chapter 7 Process 5

Debtor completes credit counseling course prior to filing:

Debtor completes credit counseling course prior to filing a

Petition and bankruptcy schedules filed with bankruptcy court:

Petition and bankruptcy schedules filed with bankruptcy court b

The filing of the case creates an injunction against all creditor collection activities. No court order is necessary… The filing of the case is all that it takes to stop creditor collection. :

The filing of the case creates an injunction against all creditor collection activities. No court order is necessary… The filing of the case is all that it takes to stop creditor collection. c

The trustee is automatically appointed. The trustee reviews the bankruptcy filings to make sure they are correct and all assets are properly claimed as exempt.:

The trustee is automatically appointed. The trustee reviews the bankruptcy filings to make sure they are correct and all assets are properly claimed as exempt. d

Meeting of creditors is held 20-40 days after filing at a conference room at the court house. No judge is present.:

Meeting of creditors is held 20-40 days after filing at a conference room at the court house. No judge is present. e

Creditors may ask about your income and debts:

Creditors may ask about your income and debts

However, usually no creditors show up to the meeting of creditors in Chapter 7 bankruptcy cases.:

However, usually no creditors show up to the meeting of creditors in Chapter 7 bankruptcy cases.

Debtor must complete a debtor education course – either online or by watching a DVD.:

Debtor must complete a debtor education course – either online or by watching a DVD. f

Debtor is discharged from virtually all debts.:

Debtor is discharged from virtually all debts. g

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Exemptions 6 The U.S. Bankruptcy Code includes exemptions that a debtor may be entitled to use. Additionally, the individual states may also create exemptions.

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Keeping Your Home, Vehicle and Possessions 7 Texas has very pro-debtor exemptions that allow most debtors to retain their homes, vehicles, and personal possessions

Unlimited homestead exemption – up to 10 acres in a city and up to 100 acres in the country (200 acres if family):

Unlimited homestead exemption – up to 10 acres in a city and up to 100 acres in the country (200 acres if family)

Pets and livestock up to $30,000 ($60,000 for head of household):

Pets and livestock up to $30,000 ($60,000 for head of household)

One vehicle per family member:

One vehicle per family member

Home furnishings, food, clothing, family heirlooms, jewelry and two firearms up to $30,000 in value ($60,000 for families):

Home furnishings, food, clothing, family heirlooms, jewelry and two firearms up to $30,000 in value ($60,000 for families)

Pensions and social security payments are totally exempt. IRA’s and Retirement accounts are exempt up to $1 million.:

Pensions and social security payments are totally exempt. IRA’s and Retirement accounts are exempt up to $1 million.

Tools of the trade and farming equipments are exempt as well.:

Tools of the trade and farming equipments are exempt as well.

Life Insurance is also exempt.:

Life Insurance is also exempt.

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Debts That Cannot Be Discharged 8

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Credit Post-Bankruptcy 8 Worrying about your credit after bankruptcy is understandable; however, for most debtors their credit improves significantly after a Chapter 7 bankruptcy.

Debt to income ratio improves the day the bankruptcy is filed.:

Debt to income ratio improves the day the bankruptcy is filed.

You cannot file a Chapter 7 Bankruptcy case for at least eight years:

You cannot file a Chapter 7 Bankruptcy case for at least eight years

Many debtors can secure car loan during the Chapter 7 or after the discharge if they have employment or steady income.:

Many debtors can secure car loan during the Chapter 7 or after the discharge if they have employment or steady income.

Obtaining a mortgage loan may take closer to two years post-bankruptcy:

Obtaining a mortgage loan may take closer to two years post-bankruptcy

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Want to Know More About Chapter 7 Bankruptcy in Texas?

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Click to visit: centraltexasbankruptcy.com Get Your Bankruptcy Questions Answered Content provided by Best Legal Practices