Bankruptcy & Debt Relief
Types of Bankruptcy Cases in Texas and Louisiana
There are several different types of bankruptcy that are available to all citizens of the United States. Those that are available for individuals and businesses include the following:
•Chapter 7, sometimes known as "straight" bankruptcy or "liquidation," requires an individual to turn over any non-exempt property so that it may be sold to pay their creditors. Many who file Chapter 7 are able to exempt and keep most or all of their property. Liens securing property that has not yet been paid off may be resolved by surrendering the property, reaffirming the debt, or redeeming the property through the help of an experienced Bankruptcy Attorney.
•Chapter 11, also known as a reorganization, is used by businesses and individuals whose debts are very large.
•Chapter 12 is a restructuring of debt, similar to a Chapter 13 bankruptcy, but is tailored to the seasonal income of family farmers and fishermen. A good Bankruptcy Lawyer will help you know which chapter to use.
•Chapter 13 is a restructuring of debt used by individuals with regular income to pay some or all of their debts over a period of years using their current income. Debts on property that has not yet been paid off, and other important debts (like IRS or Child Support) may be restructured to pay them off over time. General unsecured debts that the individual cannot afford may be discharged.
Chapter 7 and Chapter 13 bankruptcy cases are the most common for individuals. Either type may be filed by your Bankruptcy Lawyer for you individually or for a married couple filing jointly.
Chapter 7 (Liquidation)
In a bankruptcy case under Chapter 7, your Bankruptcy Lawyer will file a petition asking the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is turn over any non-exempt property you may have so that it may be sold to pay as much of your debts as the proceeds will allow, and to wipe out (discharge) the rest. Bankruptcy and property laws provide exemptions protecting much of the property that people usually have. There are some debts, however, that are not dischargeable in bankruptcy. Debts for taxes, student loans, child support or other domestic support and property settlement obligations may fall into this category. There are other types of debts as well that are not dischargeable. You should discuss these with an Bankruptcy Attorney right here in Lake Charles or Beaumont.
In Lousianna or Texas, if you want to keep property like a home or a car, but are behind on your payments, a Chapter 7 case might not be the right choice for you. Contact one of our Bankruptcy Attorneys who knows your rights with bankruptcy laws. That is because Chapter 7 bankruptcy generally does not change the rights of mortgage holders or car loan creditors. If you fit this situation, a Chapter 13 might be a better alternative.
If your income is above the median family income in your state, you might not be eligible to file a Chapter 7 bankruptcy. The Texas median family income for a family of four in 2016 was $72,698 (this number is adjusted periodically). Higher-income consumers must complete "means test" forms requiring detailed information about their income and expenses. If the means test shows that
the individual has a money left over after his/her necessary
expenses that could be paid to unsecured creditors, the
bankruptcy court may decide that they cannot file a Chapter
7 case, unless there are special extenuating circumstances.
Chapter 13 (Restructuring of Debt)
In a Chapter 13 case, you file a "Plan" showing how you will pay off some of your debts over the next three to five years. A Chapter 13 bankruptcy may allow you to keep valuable property--especially your home and vehicle -- as long as you make the payments described in your Plan. Your Plan payments are sent to a Trustee, who, in turn, pays the debts selected for payment in your Plan. Like a Chapter 7 bankruptcy, a Chapter 13 bankruptcy may allow you to surrender property you cannot afford, and upon successful completion of your Plan payments, you may receive a discharge wiping out your unsecured debt. Also, like a Chapter 7 bankruptcy, there are some debts that are not dischargeable. You should discuss these debts with your local Bankruptcy Lawyer.
You should discuss with your Bankruptcy Attorney the filing a Chapter 13 plan if you:
•own your home and are in danger of losing it because of money problems
•are behind on debt payments, but can catch up if given some time
•have valuable property which is not exempt, but you can afford to pay creditors from your income over time.