There are are many important questions when it comes to filing personal bankruptcy, so here on Higgins and Associates Texas law blog, we’ll be answering common questions.

For this post, let’s focus on Chapter 7 bankruptcy. What it is; how much it costs with lawyer fees; what you need to do to file; if you’re eligible, and more.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is the most common form of bankruptcy for filers who want to eliminate debt. You will file with the courts, usually and preferably with the help of a lawyer, and a trustee will be appointed. A “trustee” is someone who handles the liquidation of any nonexempt assets. Your car or some other asset may be worth more.

Do you always lose assets with Chapter 7 bankruptcy?

One of the disadvantages of Chapter 7 is that you may lose some assets. In bankruptcy, the less you have the less you lose. If you are jobless, rent an apartment, and have few assets, in most cases you lose nothing. There are many other ways where you lose nothing, even if you have a job, home and assets. In fact, most bankruptcy filers, of all situations and various income levels, typically lose nothing by filing. If your assets are valued too high, you might file under Chapter 13.

What is the difference with Chapter 13?
Chapter 13 is a debt repayment plan; you don’t discharge debts, you pay them back over time. Chapter 7 means you discharge (eliminate) many forms of debt. So you pay with Chapter 13, and not with Chapter 7. However, if you make a lot of money and/or have many assets, Chapter 13 lets you keep them.

What are the advantages?

We kind of pointed out how Chapter 7 can discharge debts, but what debts? You can discharge mortgage, credit card, and medical bills. You can’t discharge taxes, alimony, and child support. If you have thousands in credit card debt, Chapter 7 is a very good option. It should be noted, you can eliminate mortgage debt, but you will lose your home in this case unless you can pay it.

Are you eligible for Texas Chapter 7 bankruptcy?
In  order to file Chapter 7 bankruptcy, you must be eligible. In order to be eligible, you need to be below the median income for households in Texas.

Texas Median Income
1 Person Family – Annual Income $38,801
2 Person Family – Annual Income 55,660
3 Person Family – Annual Income $59,011
4 Person Family – Annual Income $66,145

And it goes up if you have larger families than this. If you make too much, under new Bankruptcy Code you can still file Chapter 13. Chapter 13 has definite advantages that an experience Texas bankruptcy attorney can help you with.

How much does it cost?

Chapter 7 bankruptcy costs $299 and Chapter 13 $274, in any state including Texas. Lawyer fees can range in variety, but typically are from $1,000-$2,000. Higher price does not always mean they’re an expert. Be thorough in reviewing bankruptcy lawyers.

Who should you hire?
You have all the answers you need but one: who should you hire? A Texas bankruptcy lawyer helps you fill out documentation, claim exemptions, stop creditor harassment, and gives you a fresh start financially. Hire a lawyer who cares about his or her clients, who has the time to handle your case, specializes in personal bankruptcy, and has a fair price.