The Woodlands Lawyer

Chapter 7 bankruptcy is a liquidation bankruptcy. This is sometimes called the “clean slate” bankruptcy as all non-exempt property is sold and distributed to creditors. Although there are certain types of property that are exempt from this liquidation, it may be best to explore alternatives before deciding on Chapter 7.

One alternative is credit repair. Some people think that credit repair attorneys work toward helping people prep for large purchases such as a house. Although credit repair can work that way, it doesn’t have to. A component of a solid credit repair plan is debt management and debt negotiation. Credit repair attorneys can negotiate the balance due with your creditors. If you’re feeling crushed under the burden of a large amount of debt, you may want to have a consultation with a credit repair attorney to see what can be done.

Sometimes the debt is large enough that regular credit repair won’t cut it. You may need to consider Chapter 13 bankruptcy instead of Chapter 7. Chapter 13 is sometimes called the “wage earners bankruptcy”. If you have a regular and reliable income, eligible debts will be negotiated, consolidated and then you make a regular payment that is a percentage of your income. The bankruptcy courts will make sure this payment is a reasonable payment. The courts do not want to force someone into homelessness for the sake of Chapter 13, but they are trying to cut down on the abuse of Chapter 7. You will not have to relinquish property with Chapter 13.

As a part of reducing the abuse of Chapter 7, debtors are asked to undergo credit counseling before they file for Chapter 7 debt relief. Debtors will need to go to a state authorized credit counselor before being permitted to file. This is a new addition to the laws and something that may be unfamiliar to anyone who has filed in the past or knew someone who filed in the past. Your bankruptcy attorney should be able to help you determine which credit counselors are approved in Houston, Texas.