Toronjo & Prosser Law serves individuals and businesses in the Dallas-Fort Worth area that are facing significant debt and financial stress. Our bankruptcy practice handles Chapter 7 and Chapter 13 filings with the legal expertise and compassion that you deserve. We clear up misconceptions about bankruptcy and explain how the process can start you toward a more positive future.
We have extensive experience with not only the U.S. Bankruptcy Code but with important Texas exemptions as well. If you find yourself falling behind on debt, are facing creditor harassment and lawsuits, or are being threatened with foreclosure and repossession, our Dallas bankruptcy attorneys are here to help.
Understanding Bankruptcy in Dallas
The word “bankruptcy” conjures up distressing thoughts. Researching the bankruptcy process online without the assistance of an experienced bankruptcy attorney can also create many misconceptions about the process. Filing for bankruptcy doesn’t mean you have personally failed or that your business has done anything wrong. Instead, countless Americans find themselves in situations that they had no control over and turn to bankruptcy as a solution. In addition, most debtors get to keep most or even all of their personal property in a bankruptcy, as well as their homestead.
We help clients understand how bankruptcy actually works and what it means for them and their businesses. The decision to file for bankruptcy should not be taken lightly. The most significant consequences of filing bankruptcy is that it stays on your credit report for 7-10 years. However, credit scores can start to improve after filing for bankruptcy since it helps avoid other factors – like late payments and defaults – that can also hurt your score. It is also important to note that the existence of the bankruptcy on one’s credit report for 7-10 years does NOT mean they will be ineligible for credit during that same time period.
Filing for bankruptcy can help you reorganize your debt, secure your finances, and protect your assets going forward.
Chapter 7 Bankruptcy
There are thousands of chapter 7 cases filed in the DFW metroplex each year. This option, available to both individuals and businesses, is sometimes called a liquidation bankruptcy. With Chapter 7, an assigned bankruptcy trustee will sell off as much property and assets as possible to pay down debt. It’s a good choice for debtors with unsecured debt (that is, debt that’s not backed up by collateral) and is the quickest and easiest form of bankruptcy. Some of the debts that can be cleared by Chapter 7 bankruptcy are:
- Credit card bills
- Medical bills
- Utility bills (electric, water, etc.)
- Unsecured judgments
- Collection agency debts
- Personal loans
Not all of the debtor’s property will have to be sold, due to what are known as exemptions. Small items with little or no liquidation value, such as household appliances, furniture, and clothing, will typically be exempt. Other assets like homes and vehicles may also be exempt, depending on the applicable exemption limit.
To be eligible for a Chapter 7 bankruptcy, an individual must meet certain income limitations. Your household income must be lower than the median income in Texas. If your income is higher, you have to pass a means test that takes your disposable income and debt into account.
An individual who files for Chapter 7 may have eligible debts discharged. However, businesses that file for Chapter 7 bankruptcy will not receive this discharge. Instead, the business will be closed and any remaining assets will be liquidated to pay off debts.
Chapter 13 Bankruptcy
This is a potential option for individual debtors and married couples who don’t meet the requirements of Chapter 7 bankruptcy or who want to pay down their debts. It is known as a reorganization bankruptcy because the objective is to reorganize and pay off the debt rather than liquidate assets to do so. Businesses are not eligible for Chapter 13 bankruptcies, and there have been thousands of Chapter 13 cases filed this year in the Dallas-Fort Worth metroplex.
In a Chapter 13, the debtor proposes a 3-5 year repayment plan for handling their debts. If the debtor abides by the plan and makes all required payments, the bankruptcy will be discharged. Unlike Chapter 7 bankruptcy, a successful Chapter 13 debtor will usually be able to keep his or her property.
The bankruptcy trustee and creditors will review the proposed payment plan. The judge will then set a confirmation hearing to examine it. Once approved, the debtor will continue making the proposed payments under the plan, and it is essential that all payments be made on time. Missed payments may allow creditors to resume collection efforts.
What Is The Automatic Stay in Dallas Bankruptcy Cases?
Debtors who file for either Chapter 7 or Chapter 13 bankruptcy receive important protection known as an automatic stay. This is a court order that prevents creditors from commencing or continuing any collection efforts against you, such as:
- Wage garnishments
- Creditor lawsuits
- Collection letters and calls
Creditors may, in some cases, request the court to lift the automatic stay so they can resume collections. Otherwise, the stay will remain in effect until the bankruptcy is either discharged or dismissed. Our firm can contest creditor motions to lift automatic stays and identify issues that may risk dismissal of the bankruptcy and loss of the stay.
Contact Our Dallas Bankruptcy Attorney
When you retain us as your bankruptcy law firm, we immediately get to work reviewing your debt. We also take a look at other factors, like income, to help you decide which bankruptcy option is best for you. Settling on the best solution will also depend on what your goal with the bankruptcy is. For instance, some debtors simply want the quickest course of action and are willing to liquidate as much property as possible to get it done. Others are more concerned about keeping certain assets, so they want to learn more about reorganization.
Regardless, our mission is to make sure you fully understand your legal options and what steps will be taken in your case. If you’re ready to get started on your bankruptcy, or you have questions about the process, reach out to Toronjo & Prosser Law today.