Every year, numerous Americans turn to bankruptcy as a means to find relief
from insurmountable debt. These individuals, couples, and businesses come
from all walks of life, and their financial situations are always unique.
Because finances and filers are always different, the Chapter of the U.S.
Bankruptcy Code you file under is a matter unique to you.
At Allmand Law Firm, PLLC, our Dallas bankruptcy lawyers prioritize personalized
service and support because we know it is the most important element in
a bankruptcy case. Unlike other firms that treat clients as if they are
numbers, we don’t apply a one-size-fits-all formula when handling
cases. We get to the bottom of our clients’ current financial situations,
work to understand their needs and goals, and help them explore available
options that can provide them with the benefits they need.
When it comes to selecting a Chapter of bankruptcy, most individual consumers
typically file under one of two Chapters: Chapter 7 bankruptcy (also known
as liquidation bankruptcy) or Chapter 13 bankruptcy (referred to as reorganization
bankruptcy or the wage earner’s plan).
- Qualifying – Due to laws that limit access to Chapter 7 bankruptcy to only
certain consumers and require certain factors for those who file under
Chapter 13, you might not always have a choice of which Chapter you can
file under. This is because you need to meet qualifying criteria. This
is important to understand, as you can’t simply choose a Chapter
and launch into the process.
- Chapter 7 –
Chapter 7 bankruptcy is intended to help debtors who face the most pressing debt
concerns. It is typically reserved for consumers who have little to no
assets, and who do not have the financial means to continue making monthly
payments toward pre-existing debts. In order to qualify for Chapter 7,
filers must pass a
means test that compares their monthly income to the median monthly income in the
state of Texas. Generally, if your average monthly income is less than
or equal to the state’s median income, you will be eligible for
Chapter 7. If it is more than the state median, you will need to determine
if you have enough disposable income to make payments. If your disposable
income is too high, you likely will not be able to choose Chapter 7.
- Chapter 13 –
Chapter 13 bankruptcy is a wage earner’s plan that reorganizes debt and allows
filers to make consolidated monthly payments toward them over three to
five years. As such, filers must have enough available funds and income
to make payments over the course of their reorganization plan. Chapter
13 bankruptcy doesn’t mean you don’t get a discharge, that
still happens at the end of a plan. It also enables filers to keep certain
property by paying back all or at least some of what they owe on property
with pre-existing debt.
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Your choice in which Chapter of bankruptcy to file under depends on qualifying
criteria, your personal situation, and your ultimate goals for the financial
future. Understanding the unique benefits of each Chapter, as well as
how they will impact you, can be a difficult matter, which is why it becomes
important to work with experienced attorneys like ours at Allmand Law
Firm, PLLC. During a FREE financial empowerment session, our legal team
can help you understand which Chapter of bankruptcy is best for you, and
how we can help you take the right steps to navigate the process ahead.