The Woodlands Lawyer

In the fiscal quarter ending September 30, 2007 there were 132,008 Chapter 7 bankruptcy filings. That brought the year to date filings up to 1,568,877 and that number does not include Chapter 13 filings or the final quarter filings for 2007.

Needless to say, many people are seeing bankruptcy as the only way out of debt. Of the people who file bankruptcy, half have suffered a serious health problem, two thirds have endured a loss of employment and they tend to be slightly more educated than the general populace.

What is bankruptcy?

There are two types of bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 is a liquidation bankruptcy. All assets (with some notable exceptions) are turned over to a trustee, converted into cash and given to creditors. All dischargeable debts are discharged in a few months. This is the “fresh start” or “clean slate” bankruptcy. Although recent changes in the laws and codes concerning bankruptcy have tightened the restrictions on who can file Chapter 7 as well as increasing the steps needed to file, this still remains as the only option for many consumers.

Chapter 13 is a reorganization bankruptcy. Some people cannot file Chapter 7 or do not wish to release non-exempt property and elect to file Chapter 13. In short, this type of bankruptcy takes all debt and sets up a payment plan to become debt free in 3-5 years. The courts will factor in living expenses and come up with workable payments.

What property can you keep with Chapter 7 bankruptcy?

Different states have different dollar amounts of exempt property and different classifications of property. It’s important to discuss the specifics of your assets with your Woodlands bankruptcy lawyer, but in Texas property used as a domicile will not be seized. Pension plans, health care plans and educational funds are exempt also; although, there are specifications that your bankruptcy lawyer can discuss with you.

You won’t be rendered homeless if you need to file bankruptcy. It’s never pleasant to endure the process, but if it’s something you really need, it may be the only way to secure a better future.