Chapter 7 Bankruptcy Attorney in DeSoto, Texas

Most of us have faced financial troubles at some point in our lives. Perhaps you were able to cut back on spending and implement a payment plan or borrow money from a family member, but sometimes financial relief doesn’t come this easy. If you’ve exhausted all your options for debt relief and are still looking for answers, you shouldn’t discount the idea of bankruptcy.

Many people have misinformed beliefs about what bankruptcy is or what it will mean for their future. They view filing for bankruptcy as “failing,” when in fact it’s an underutilized tool that can help give you the fresh start you need. Of course, there are still many factors you need to consider before filing, and that’s where an experienced bankruptcy attorney comes in.

At the Hunt Law Firm, you’ll get the help you need from someone who truly cares about your story and who’ll take the time to fully explain the process so you’re able to make informed decisions about your future. If you’re in the DeSoto, Texas area or anywhere throughout Dallas and Fort Worth, call Attorney Gwendolyn E. Hunt today to set up a consultation.

Chapter 7 Bankruptcy (“Liquidation” Bankruptcy)

There are two main types of bankruptcy that are available to individuals—Chapter 7 and Chapter 13. Chapter 7 bankruptcy is also referred to as “liquidation” bankruptcy because some of your assets will need to be sold to pay off creditors, with some notable exceptions. After this process is complete (usually within four months), your debts will be discharged. With Chapter 13, you get to keep most of your assets, but you’ll still be responsible for paying off your debts under a court-mandated plan that usually lasts three to five years. 

The main feature of Chapter 7 is that you have to liquidate assets in order to discharge debt. However, there are exceptions that allow you to keep some assets, and not all debt will be eligible for discharge. In general, you’re allowed to keep much of your personal property like furniture, clothing, your primary vehicle, and in many cases, your home. In Texas, this is generally determined by how much equity you hold. An experienced attorney can help you analyze your individual case and can give you a better idea of which assets will be exempt and which will have to be sold. 

There are also certain debts that cannot be discharged under this filing. Debts like child support, taxes, and most student loans are non-dischargeable, meaning even after you’ve completed your filing you’ll still be responsible for paying. It will discharge debts like medical bills, consumer debt (like credit cards), and personal loans.

Qualifying for Chapter 7

Chapter 7 filing tends to be a more popular choice than Chapter 13 for those who qualify because it can eliminate a significant portion of your debt without you having to pay it back. However, not everyone will qualify. You must meet certain income requirements to file Chapter 7, and this generally means that your monthly income is less than the average median income for a household your size in your state. The vast majority of people qualify based on income alone, but if you’re over the median or right on the cusp, you will likely have to pass a “means test.” This test determines your average disposable income. If it meets a certain threshold, then you can file Chapter 7.

When is Chapter 7 a Good Debt Relief Option?

Chapter 7 offers individuals relatively fast debt relief and is ideal for those without a lot of assets. There may even be some cases where all your assets will be exempt from the filing and in these cases, Chapter 7 will likely be your best option to help you get back on your feet. It’s also ideal for those who are unable to realistically pay back their debts in the next three to five years. For example, if your total dischargeable debts are more than 50% of your annual income, you might strongly consider Chapter 7 bankruptcy. 

You should certainly consider filing for bankruptcy, but only after you’ve met with an attorney who has experience in debt relief and bankruptcy. In some cases, an attorney can help you negotiate with your creditors to reduce your payments or set up a payment plan that you can actually follow. However, this just isn’t realistic for many people. For these individuals and families, bankruptcy can be a path forward.