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Frequently Asked Questioned Consumer Bankruptcy Frequently Asked Questions and Answers

UNDER WHAT CIRCUMSTANCES MIGHT AN INDIVIDUAL CHOOSE TO FILE A BANKRUPTCY?

An individual might choose a bankruptcy when a life event, such as a job loss, divorce or medical emergency, causes a disruption in income or a complete lifestyle change. For a consumer, when income is disrupted, and debts can be repaid, a chapter 13 may be the best option to repay any home, vehicle or tax arrears over a period of 3 to 5 years. In other situations, such as when the mortgage has not fallen behind, or income is below average, a chapter 7 may be the best option. It is important to consult with a bankruptcy attorney since bankruptcy is extremely complex. Your circumstances may not fit neatly into the descriptions listed here.

HOW DO I CHOOSE THE RIGHT BANKRUPTCY LAWYER?

You should choose a bankruptcy lawyer you feel comfortable with. A good place to start is to choose an attorney Board Certified in Consumer Bankruptcy by the Texas Board of Legal Specialization and who has experience practicing in the area where you live.

HOW MUCH DOES IT COST TO FILE BANKRUPTCY?

Filing fees in a chapter 13 bankruptcy are $310. Filing fees in a chapter 7 bankruptcy are $335.00. You will also be responsible for a credit counseling class, a credit report and possibly a financial management class if your Trustee does not offer this course free.

HOW MUCH DOES IT COST TO HIRE A BANKRUPTCY LAWYER?

In a chapter 13, the Court has set all attorney fees and all attorneys must charge the same unless otherwise ordered by the Court. In a chapter 7, fees are determined on a case by case basis.

HOW LONG DOES THE BANKRUPTCY PROCESS TAKE?

The term of a bankruptcy depends on the chapter you have filed, your repayment plan and your current monthly income. If you have filed a chapter 7, your case is likely to last 3 to 5 months. In a chapter 13, the term is 36 to 60 months. In a chapter 7, the term is shorter because you are not proposing a repayment plan.

DO I MAKE TOO MUCH MONEY TO FILE BANKRUPTCY?

Chapter 7 eligibility is partly determined by your income. However, chapter 13 eligibility is determined by your debt.

WILL I LOSE PROPERTY IF I FILE BANKRUPTCY?

Only if you have non-exempt assets. Exempt assets are beyond the reach of your creditors. Non-exempt assets may be used to pay your debts. Since the exemption statutes are generous, most clients do not have any non-exempt assets. However, it is important to disclose all your assets.

CAN I CONTINUE TO LIVE IN MY HOME?

Yes, if you are making ongoing mortgage payments and have a plan (such as a loan modification or a chapter 13 plan) to catch up the arrears.

CAN I CONTINUE TO LIVE IN MY APARTMENT?

Yes, if you stay current on the rent and your landlord agrees.

CAN I KEEP MY CAR?

Yes, if you are current on your car payment or you can catch up the car payment arrears (usually through a chapter 13 plan). You must also maintain appropriate vehicle insurance.

CAN DEBTS SOLD TO A COLLECTION AGENCY BE DISCHARGED?

Yes, debts sold to a factoring company or collection agency can be discharged just as a normal unsecured debt.

CAN I SELL OR REFINANCE MY HOUSE WHILE I AM IN BANKRUPTCY?

Yes, you may sell your house if you obtain Court permission.

WHO ARE THE MAIN PLAYERS IN BANKRUPTCY?

Debtor: the individual, couple or business who owes money

Creditors: the entities who loaned the individual, couple or business money

Trustee: The individual who administers the bankruptcy estate

United States Trustee: part of the Department of Justice that oversees bankruptcy cases and trustees

Judges: the person who resolves disputes

BANKRUPTCY VOCABULARY WORDS

Petition: the paperwork you file to declare bankruptcy

Automatic Stay: automatic bankruptcy protections which begin as soon as you file. While the stay is in place, your creditors cannot write you, call you, sue you or continue with any pending actions such as a lawsuit or foreclosure.

Discharge: the goal of a bankruptcy. If you complete your bankruptcy case and follow all the bankruptcy rules, you will receive a discharge. If you receive a discharge, your creditors cannot ask you to repay a discharged debt. Discharged debts include credit cards, medical bills, payday loans, repossessions and certain taxes.

If you would like to set an appointment for your free consultation, email megan@priceandpricelawfirm.com or call 214-696-9601.

**The information contained in this booklet is general information and is not legal advice about your specific case. **

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