If you are facing financial difficulties, bankruptcy might be the best way to gain control of the situation. Because of the 2005 Bankruptcy Act, anyone who is filing bankruptcy must participate in credit counseling no earlier than six months before filing for bankruptcy and then complete a financial management instructional course after having filed bankruptcy. There is a Bankruptcy Act Means Test in which your income and expenses are analyzed to determine if you qualify for Chapter 7 bankruptcy relief or if you must file Chapter 13 bankruptcy which reorganizes your debts. The court will calculate your average annual income for the six months before filing bankruptcy and compare it to the state’s median income. If your income is less than the median you can file Chapter 7, but if your income exceeds the median, the rest of the means test will be done to see if you are eligible for Chapter 7 or if you must file a Chapter 13 instead.
Getting Ready to File
Preparing to file bankruptcy involves a lot of planning and preparation. Gathering up the supporting documentation is a big part of a successful bankruptcy petition. You will have to show proof of income and itemize current income sources, provide major financial transaction information for the last two years, itemize your monthly living expenses, list all secured and unsecured debts, and list all property – both assets and possessions as well as real estate.
Filing Bankruptcy
After all your documentation has been gathered, you will need to find out which property you have that cannot be seized based on Texas exemptions. An attorney can help you with this aspect of your case. To file bankruptcy, you or a lawyer on your behalf will need to file a petition consisting of two pages along with other forms, which are referred to as schedules, at your Texas district bankruptcy court. The schedules describe the last two years of your financial transactions. If after going over all the documents the judge or any of your creditors feel that you haven’t been honest or accurate in your petition filing, it could jeopardize the outcome of your case. When you file your bankruptcy, you will pay the filing fee. The cost of filing a Chapter 7 bankruptcy is $306, which cannot be waived but might be paid through installments. To file a Chapter 13 bankruptcy the fee is $281 and cannot be waived.
Additional Requirements for a Chapter 13 Bankruptcy
To file a Chapter 13 bankruptcy, you must also submit a proposed repayment plan that shows after reasonable monthly expenses are paid how much money you will have to pay toward the outstanding bills and how it will be divided among your creditors. Priority claims, such as child support and taxes, and secured debts, such as mortgages, must be paid in full, but unsecured debts such as credit cards and medical bills are usually only partially paid. Unsecured debts might be paid for as little as 10 cents on the dollar depending on your situation.
While bankruptcy should never be the first choice among those struggling financially, the fact is that bankruptcy often allows filers a fresh start where they can make new, positive changes in how they handle their money. Everyone’s situation is different, but if you are considering filing for bankruptcy in the great state of Texas, then you should be sure to contact the Texas bankruptcy lawyers at Fears Nachawati. Having an experienced bankruptcy attorney to turn to can help you decide if filing for bankruptcy really is the best option for your situation and how to go ahead with the process if so.
Please call (866) 705-7584 or visit the offices of Fears Nachawati located throughout Texas, including in Houston, Dallas, Austin, Fort Worth, and San Antonio.