Bankruptcy in Texas
Everything is bigger in Texas and so are the bankruptcy exemptions. A bankruptcy lawyer can use these big exemptions to help protect your property throughout bankruptcy proceedings; so, we're going to use this article to explain how Texas bankruptcy law differs from bankruptcy law in other states, help you understand the differences between filing Chapter 7 and Chapter 13 bankruptcies, guide you in choosing a bankruptcy lawyer, and detail how to work with your lawyer.
How Texas Bankruptcy Law Differs from the Laws of Other States
Texas has a big homestead exemption; in fact, it's unlimited and has been since the 1800s when the state was working hard to attract new settlers. This means that no matter how big your home (or how valuable), you can keep it even if you file bankruptcy.
And, while you have the choice of choosing federal and state bankruptcy exemptions, many Texans choose the state exemptions because of the unlimited homestead exemption.
In addition, in Texas you can protect your clothing, personal property, jewelry, tools, food, farm animals, pets, farm equipment, wages, insurance, and the like.
Most Texans don't lose any assets at all when they go through bankruptcy.
Your Choices in Filing Bankruptcy in Texas Chapter 7 or Chapter 13
Both Chapter 7 and Chapter 13 bankruptcies stop creditor phone calls, letters, and lawsuits. That's a huge relief to all Texans who suffer creditor harassment. In fact, the harassment must stop immediately when the bankruptcy court issues the automatic stay and your case starts.
- Chapter 7 is the simpler of the two paths to bankruptcy. Once you qualify to file and the court accepts your petition, the process of eliminating your unsecured debts starts. It finishes up about 6 months later and you have a clean slate.
- Chapter 13 is the more complex of the two paths to bankruptcy. If you don't qualify for Chapter 7, Chapter 13 is usually the right path. Some debts may be discharged, but the emphasis is on restructuring your debt so that you can afford to pay it off in 3 to 5 years. It finishes up at the end of the repayment period and you have a clean slate.
How to Choose a Bankruptcy Attorney
The perfect way to find a bankruptcy attorney is through a loved one. Otherwise, choose an attorney who focuses his or her practice on bankruptcy. Most states don't allow attorneys to say they "specialize" in a specific area of practice so look for a lawyer who focuses on bankruptcy. You can look online or call your local bar association for a referral.
How to Prepare to Work with a Bankruptcy Attorney
You are your own best advocate so help your bankruptcy lawyer by collecting and organizing your financial paperwork such as financial statements, bills, pay stubs, K-1s, contracts, and anything else that is related to your finances. Your attorney will give you forms that will help you to organize all of this information.
Where to Get Help Filing Bankruptcy
Always consult with a bankruptcy attorney. Your attorney will help you decide:
- Whether bankruptcy is the right choice or whether there are alternatives.
- Whether Chapter 7 or Chapter 13 is the right path.
- How to organize your financials and best present your case.