Have you ever wondered what options are available when overwhelming debt makes it impossible to move forward? For many in Texas, filing for bankruptcy relief offers a fresh start. With Chapter 7 bankruptcy, eligible individuals can discharge unsecured debts and regain financial stability. But how does it work, and is it the right choice for you?
If you’re considering filing for bankruptcy relief in Texas, it’s essential to understand the differences between Chapter 7 and Chapter 13. While Chapter 7 bankruptcy eliminates qualifying debts quickly, Chapter 13 helps reorganize them into manageable payments. Knowing the distinctions will help you make the best decision for your financial future.
At the Law Office of Joel Gonzalez, we specialize in helping individuals in Corpus Christi navigate the Chapter 7 bankruptcy process with personalized and expert guidance.
Let’s break down the essentials of Chapter 7 bankruptcy, discuss how it compares to Chapter 13, and help you decide if it’s the solution to your financial challenges.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” is designed to help individuals eliminate unsecured debts like:
- Credit card bills
- Medical bills
- Personal loans
Unlike Chapter 13, there’s no repayment plan. Instead, non-exempt assets, if any, may be sold to pay creditors. In Texas, generous exemptions often allow filers to keep most, if not all, of their property.
Eligibility for Chapter 7 Bankruptcy
To qualify for Chapter 7, you must pass a means test that evaluates your income against the state median. If your income falls below the median, you’re likely eligible. Even if it’s above, other factors like allowable expenses may still qualify you.
You cannot file for Chapter 7 bankruptcy if you’ve received a discharge under Chapter 7 within the past eight years or Chapter 13 within six years.
Chapter 7 vs. Chapter 13: Key Differences
Understanding the differences between Chapter 7 and Chapter 13 is critical when choosing which bankruptcy option fits your situation.
Chapter 7 Bankruptcy:
- Timeline: Typically resolved within 3–6 months.
- Debts Addressed: Best for unsecured debts like credit cards and medical bills.
- Eligibility: Must pass the means test.
- Assets: Non-exempt property may be sold, but Texas exemptions often protect most assets.
Chapter 13 Bankruptcy:
- Timeline: Takes 3–5 years to complete a repayment plan.
- Debts Addressed: Suitable for those needing to catch up on mortgage payments or car loans.
- Eligibility: Income must support the repayment plan.
- Assets: No asset liquidation, but you must commit disposable income to the repayment plan.
Wondering which type of bankruptcy is ideal for you? Learn how to choose the best route. (please link to LFPA2)
Is Chapter 7 Bankruptcy Right for You?
Chapter 7 bankruptcy is an excellent option for those with significant unsecured debt and limited income. It provides a clean slate without the burden of ongoing repayment plans. If you have substantial secured debts, like a mortgage or car loan, Chapter 13 might be more appropriate.
What Happens After Filing for Chapter 7 Bankruptcy?
Once you file, an automatic stay halts collection actions, including creditor calls and lawsuits. A trustee is appointed to oversee your case, ensuring all required steps are completed. After your debts are discharged, you’ll be free from financial obligations tied to the bankruptcy.
Ready to Take the Next Step?
Struggling with debt can feel overwhelming, but taking action can provide relief. At the Law Office of Joel Gonzalez, we help clients file for bankruptcy relief in Texas and regain control of their finances. As an experienced bankruptcy lawyer in Corpus Christi, we focus on guiding you through the process with clarity and confidence.
If you’re ready to learn how Chapter 7 bankruptcy can help you, contact us at (361) 654-DEBT today. We’re here to help you achieve financial freedom and start fresh.
