Thousands of Americans will file for bankruptcy this year. Facing economic hardships due to unemployment, illness, or a number of other reasons, they will file for Chapter 7 in court as a means of protecting their assets. The Law Offices of David Kohm can provide assistance to anyone considering Chapter 7 protection.
But what is chapter 7 bankruptcy and how does it work?
The Basics of Chapter 7 Bankruptcy
Filing for bankruptcy can be complicated, and recent changes in U.S. bankruptcy laws have added to the complexity of the process. Although individual filings are allowed, an Arlington bankruptcy attorney can be the best advocate in ensuring that the process is completed in a proper manner.
There are different sections to bankruptcy law, but Chapter 7 is normally used in cases of personal bankruptcy. It can be used by businesses and by individuals who own businesses or property.
The declaration of bankruptcy can’t be used to resolve certain types of debt, however, including:
- student loans
- property taxes
- income taxes that have not been paid over the most recent three years
- other types of restitution that are related to criminal proceedings
The Chapter 7 process goes something like this:
- The bankruptcy process in Texas begins with a credit counseling session that must be completed with an approved credit counselor.
- It will then be necessary to pass a means test, which is based on several factors, including a person’s monthly income.
- In cases where someone’s income is above the stipulated amount, the Chapter 7 filing will be transferred by the court to a Chapter 13 proceeding, which will make it possible to pay back the debt over time.
- In the event that the Chapter 7 filing is approved, the person will then be allowed to file the petition and, subsequently, make an appearance in bankruptcy court.
- A bankruptcy attorney can provide advice on when to file and whether the requirements are being satisfied.
The Benefits of Filing for Bankruptcy
A Chapter 7 bankruptcy will eliminate most of what a person owes. It can stop threatening letters and annoying calls from collection agencies. It can also prevent the foreclosure of a home loan, the repossession of a vehicle, or the garnishment of wages.
Although certain property is protected after a bankruptcy filing, other assets can be sold off in order to pay back some of the person’s debt. Those who file will receive an automatic stay that can restrict collection activity. However, the changes to the law can reduce some of the protections that had been associated with the bankruptcy law, including the automatic stay.
There are many factors that can affect one’s eligibility to file for bankruptcy, including a person’s marital status and the nature of one’s debt. An Arlington bankruptcy attorney can someone deal with these many issues.
Those facing bankruptcy should contact the Law Offices of David Kohm at 817-204-0900.