Bankruptcy
Bankruptcy stops creditors from trying to collect on debts you owe them until the law sorts you out and allows someone who cannot pay his bills a fresh start; at least financially. The right to be able to file bankrupts is a federal law and all cases are handled within a federal court. The same can be said for bankruptcies in Texas.
Bankruptcy In Texas And What It Can Do for Me?
- Bankruptcy in Texas and out could allow you out of your obligation to pay all or most of the debts that you owe or “discharge” them. It gives you a new start financially.
- It may stop a foreclosure of your home as well as give you the opportunity to catch up on payments that you may have missed. Bankruptcy does not clear out a mortgage or lien without you making any further payments.
- It could stop your car or other properties from being repossessed or possibly make the creditor return your property even if they have already repossessed it.
- It could stop garnishment of your wages, stop the harassment from debt collection agencies and other actions from creditors trying to stop a debt.
- It could prevent the termination of or restore your utilities.
- It could let you challenge claims from collectors who are committing frauds or trying to get more than what you actually owe.
What Types of Bankruptcy In Texas Are There?
- Four different kinds of bankruptcy cases exist under law.
- Chapter Seven is liquidation or a straight bankruptcy and requires a debtor to surrender property over a certain limit so that the profits can be used to pay off the creditors.
- Chapter Eleven is reorganization and is typically used by businesses or individuals with very high debts.
- Chapter twelve is for farmer families.
- Chapter Thirteen is debt adjustment and makes the debtor make a plan to pay part or all of debts from their current income at the time.
The average person filing for bankruptcy in Texas and the rest of the United States will file under Chapter Thirteen or Chapter Seven. Either may be filed by a married couple or by an individual.
Texas Bankruptcy will also let you claim federal exemption statuses in lieu of Texas exemptions.
There is a limit to exemptions of equity you have tied up in the property. Equity by definition is difference between what you have left to pay on the property and what the value of the property is. In example, if you have a car that has a value of five thousand dollars on it and you still owe four thousand dollars, then the equity has a value of a thousand dollars.
If property has been secured using a loan, like a home or a car, and you are up to date on all your payments and your exemptions are enough to cover the equity, you can keep making payments on the loan and keep the property throughout filing bankruptcy. If your exemptions do not cover all of your equity, the trustee may liquidate the asset and use the proceeds to pay your debt. Usually, you would be entitled to a payment of cash for the same value as your exemption.
Bankruptcy laws in Texas allow for a couple that is married and filing together to each claim a full set as far as exemptions go unless it is noted otherwise. To keep a property which is not exempt, a debtor usually must pay the trustee what the value is of the property which is not exempt. When an individual files for bankruptcy in Texas, the individual can also use some federal exemptions.
| ASSET | Description of Exemption | |
| Homestead | Unlimited; property must not be more than one acre in a city, village or town or more than one hundred acres for an individual and two hundred acres for a family elsewhere. | |
| Property Of A Personal Nature | Sporting and athletic equipment such as bicycles, two firearms, furnishings for the home, food, jewelry, one motor vehicle for every person that has a license or uses a license for someone who does not have, two horses, donkeys or mules, one saddle, bridle and blanket for each, twelve cattle and sixty other kinds of livestock, one hundred and twenty birds and pets up to thirty thousandPlots for burial
Aids for health |
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| Insurance | Benefits from churchBenefits from fraternities
The present value of life insurance Group insurance from public schools Employee insurance from Texas Benefits from university or college Texas employment |
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| Miscellaneous | Partnership of Business Property | |
| Pensions | District and county employeesIRAs
Firefighters Employees of Municipalities Judges Keoghs Officers within law enforcement Officers on the Police Force Benefits From Retirement Employees of the state Teachers |
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| Public Benefits | Victims of CrimeAssistance medically
Assistance from the public Compensation for unemployment Workers Compensation |
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| Tools of Trade | Ranching and farming implements and vehicles Books, equipment and tools | |
| Wages | Wages that were earned but unpaidSeventy-five percent of unpaid commissions |