Nobody ever wanted to file for bankruptcy, and if you have another viable option, you shouldn’t, either. But if you are drowning in debt, if no matter how hard you try you just cannot keep all your creditors happy, then you should consider a Chapter 7 or Chapter 13 Bankruptcy.

The object of a Chapter 7 is to discharge your debts. Creditors cannot make any attempt to collect a discharged debt; to do so violates a permanent federal court injunction. Most debts are dischargeable; exceptions are student loans, most taxes, child support, claims resulting from fraud, and a few others. Probably the thing to remember is that many more debts are dischargeable than are non-dischargeable.

In Texas, most Chapter 7 debtors learn that all of their property is exempt. This means that they do not have to turn any property over to the Chapter 7 Trustee, and keep everything they own. This does not mean all of your property is exempt, however. If I am exploring the possibility of a bankruptcy remedy with you, we carefully explore all your assets and expectations to determine what, if any, or your property is not exempt.

The object of a Chapter 13 Bankruptcy is to pay the debts, under court protection. Unsecured debts are paid without the accrual of additional interest. Secured debts must be paid in full, but sometimes at less than the contractual payment amount. Debtors are expected to do their best to pay their debts in full, but if they can show that this is not feasible, the court under proper circumstances will confirm a plan which pays unsecured debts less than 100 per cent. Chapter 13 is the best remedy when the problem is a non dischargeable debt, or unpaid taxes, when the debtor has nonexempt property, or when he is about to lose a home, car, or other property to a secured creditor.

Chapter 11

Bankruptcy is a remedy for corporations and very wealthy people. Chapter 11's allow for a wide range of imaginative solutions to debt problems, but because of the expense, individuals usually choose a Chapter 13 if at all possible.

Lastly, Chapter 12 provides relief for family farmers, and attempts to solve problems peculiar to those enterprises.

Whenever any sort of bankruptcy petition is filed, the Automatic Stay of the Bankruptcy Court goes into effect, which is in the nature of an injunction prohibiting most forms of debt collection outside of bankruptcy court while the bankruptcy is pending.

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