Houston Bankruptcy Lawyer
Helping Clients Break Free From Debt
Unfortunately, we live in an ever-changing economy that can result in individuals experiencing job loss, high debts, and having to deal with creditors who demand their money. If you are facing financial struggles, you may feel overwhelmed and unsure of your legal options. Depending on your situation, one solution may be to file for bankruptcy to facilitate a fresh financial start.
If you are considering the option of filing for bankruptcy, you must consult with an experienced lawyer who can advise you of your legal options. Kisch Law Firm, PLLC, has comprehensive experience handling bankruptcy cases and will work hard to help you achieve financial freedom. Contact our Houston bankruptcy lawyer today to schedule a free consultation so we can begin working on your case.
What is Bankruptcy in Texas?
Bankruptcy is a legal process that allows Individuals and business owners to manage or eliminate debts. In Texas and all over the country, bankruptcy legal issues are governed by the U.S. Bankruptcy Code and handled in federal courts.
Depending on the circumstances involved, the two most common types of bankruptcy options are Chapter 7, which liquidates assets, and Chapter 13, which allows individuals to make payments over time to repay debts.
Many individuals or business owners who pursue bankruptcy have accumulated significant debts due to medical bills, high credit card balances, or personal loans. One of the benefits of filing for bankruptcy is that it places an automatic stay on any actions that creditors may be trying to pursue, such as foreclosure, wage garnishment, or repossessions.
Although bankruptcy may be the best solution for your financial situation, it is in your best interests to hire an experienced attorney to assist you. Federal bankruptcy laws are overly complex and challenging to navigate without skilled legal advice.
Why Do I Need to Hire a Bankruptcy Attorney?
Bankruptcy is a detailed legal process that requires skilled legal representation. Texas has strict bankruptcy guidelines that dictate what assets are protected from creditors. One of the last things that you want is to jeopardize your assets. Your attorney can craft a custom-tailored legal strategy that identifies and ensures that you can claim exemptions for all qualifying assets.
Another critical service that a bankruptcy attorney assists clients with is choosing the right bankruptcy chapter. Each bankruptcy chapter has its requirements and limitations, so an attorney must advise you as to which one will provide you with maximum benefits. Additionally, your legal counsel will also work with creditors to create affordable payment plans or a debt settlement that will protect your financial future.
Once your attorney has advised you of the right chapter, they will begin the bankruptcy process, such as filing legal paperwork and ensuring that it is turned in promptly. One of the most challenging portions of filing for bankruptcy is that it requires substantial documentation. A knowledgeable attorney can ensure that the process goes smoothly and that you do not encounter missteps that could jeopardize your case or cause you to lose assets unnecessarily.
What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
One of the most common questions that potential clients ask is, “What is the difference between Chapter 7 and Chapter 13 bankruptcy?” Each Chapter has its own set of rules and processes for resolving debts.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy may involve the liquidation of non-exempt assets to repay creditors. In Texas, non-exempt assets that may be sold include:
- Cash, savings, and non-retirement investments that are not exempt
- Luxury items, such as expensive jewelry, artwork, or collectibles
- Extra vehicles, beyond one per licensed household member
- Real estate that exceeds the homestead exemption limit
- Vacation homes or second properties
Assets that fall within Texas’s generous exemption laws—like a primary residence and certain personal property—are typically protected from liquidation.
If you meet the income qualifications to file a Chapter 7, a trustee may sell the non-exempt assets, and the proceeds of the sale will be distributed to creditors. After the non-exempt assets have been liquidated, all remaining eligible debts will no longer be eliminated. In most instances, Chapter 7 bankruptcy can be finished within four to six months.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy involves the reorganization of debts. Chapter 13 allows individuals to repay all or some of their financial obligations through debt settlement strategies. It is the most effective solution for individuals who wish to keep their non-exempt assets and repay their debts through a court-approved repayment plan. The court must approve Chapter 13 repayment plans, which are generally set up to be completed within three to five years. The payments are made to a Chapter 13 trustee who then pays creditors.
Will I Lose All My Assets if I File for Bankruptcy?
One of the biggest fears that potentially keeps individuals from filing for bankruptcy is the concern that they will lose all of their assets. However, those who file for bankruptcy in Texas are not automatically at risk for losing assets. Under federal law, many assets are considered exempt from bankruptcy proceedings.
It is worth noting that although Chapter 7 bankruptcy does involve settling debts by liquidating non-exempt assets, several types of assets are protected. Some of the most common exemptions include an individual’s primary residence, one vehicle per person per household of driving age, retirement accounts, and personal and household belongings.
One of the most significant benefits of having legal representation during bankruptcy proceedings is ensuring that your rights are protected. If you are considering filing for Chapter 7 bankruptcy, you will need a law firm like Kisch Law Firm, PLLC, to advise you every step of the way. Our Houston bankruptcy lawyer has comprehensive experience helping clients clear a path to financial freedom.
How Does the Texas Homestead Exemption Protect Homeowners Who Are Filing for Bankruptcy?
Concerning bankruptcy, the homestead exemption protects Texas homeowners’ primary residence from being seized by creditors in Chapter 7 and Chapter 13. The homestead exemption also stipulates that there is no monetary limit on the amount of equity that is protected. As a result, any homeowner who is going through bankruptcy can keep their primary residence as long as it meets the acreage limits of 10 acres in city settings and 200 acres for a family or 100 acres for a single person in rural communities.
It is significant to point out that to claim the homestead exemption, you must have lived in your home and maintained it as your primary residence for at least 3 years and five months or 1,215 days before filing for bankruptcy. Furthermore, you must have resided in Texas for at least two years or 730 calendar days before you are eligible to take Texas exemptions in your bankruptcy. Additionally, you must have owned your home in Texas for at least 40 months before filing for bankruptcy to avoid having your homestead exemption capped at $214,000 under federal law.
For those individuals who do not meet the eligibility requirements to file for a Texas homestead exemption, they may still qualify for the federal exemption that caps equity at $31,575 for an individual or $63,150 for couples who are filing jointly.
How Will Bankruptcy Affect My Credit Rating?
Although bankruptcy is a means to a financial fresh start, unfortunately, it will also most likely result in a significant drop in your credit rating. In many instances, your score could drop as much as 100 to 200 points. Chapter 7 bankruptcy is visible on your credit report for 10 years, and Chapter 13 remains for seven years.
However, even though bankruptcy can negatively impact your credit score, there are steps that you can take to start rebuilding your credit. One of the primary benefits of working with a Houston attorney is that they can help you understand the legal ramifications involved with filing for bankruptcy. For example, in terms of credit reporting, Chapter 7 bankruptcy is more damaging to credit ratings than Chapter 13 because it involves eliminating debts.
The good news is that not only can an attorney assist you with filing for bankruptcy, but they can also advise you on how to rebuild your credit. Even though bankruptcy can be a first step to financial freedom, you must plan wisely for your future.
We provide our clients with a program called 7 Steps to a 720 Credit Score to help with rebuilding their credit score.
Why Should I Trust Your Houston Bankruptcy Law Firm to Help Me With My Financial Situation?
Choosing to declare bankruptcy can be an agonizing decision. Due to the numerous misconceptions and legal challenges surrounding bankruptcy proceedings, it is advisable to hire an attorney with comprehensive experience in helping clients clear their debts.
Kisch Law Firm, PLLC, is a Houston law firm passionately committed to ensuring that clients have the information they need to make well-informed legal decisions. Contact our law offices today at 844-417-6343 to schedule a free initial consultation so we may professionally analyze your case and help you gain the peace of mind you deserve.