Many people owe debts to several creditors, and most of those people fully intend to pay their debts. Even if people have the best intentions, however, unexpected health issues, a reduction in income, or other obstacles can cause a sudden inability to make payments on debts. Mounting debts can be oppressive, and people dealing with debts that they cannot pay may be unsure of what they can do to regain financial security. If you are grappling with excessive debts, it is wise to meet with an attorney to discuss whether you may be eligible to file for Chapter 7 bankruptcy. The Dallas Fort Worth Chapter 7 bankruptcy lawyers at Powell Law Offices have ample experience helping people seek relief from debts and can counsel you regarding your available options.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is less complex than other forms of bankruptcy. For example, unlike Chapter 13 bankruptcy, Chapter 7 does not require a debtor to develop a repayment plan. Instead, in Chapter 7 bankruptcy, certain assets will be sold to pay a debtor’s creditors.
A debtor seeking relief via Chapter 7 bankruptcy must include schedules of their assets, liabilities, income, and expenditures, as well as a statement of their finances, along with their bankruptcy petition. The debtor must also provide a list of all of their creditors and the nature and amount of their claims, together with a schedule of any exempt property, which is defined by law. Once the petition is filed, any collection efforts by creditors will automatically be stayed. In other words, creditors cannot begin or continue lawsuits, cannot garnish a debtor’s wages, and cannot even call a debtor regarding a debt. A Chapter 7 bankruptcy attorney in Dallas Fort Worth can help a debtor take action if a creditor violates these rules.
After the petition is filed, a trustee will be appointed to administer the bankruptcy estate. As part of this process, the trustee will hold a meeting of creditors, during which the debtor must answer questions regarding his or her assets, income, and liabilities. After the creditors’ meeting, the trustee will liquidate any non-exempt assets and use the proceeds from the sale of the assets to pay the debtor’s creditors. Debts are classified into six groups under the bankruptcy code, and they are paid in order of priority. Certain debts cannot be discharged via Chapter 7 bankruptcy, though. These include debts owed for spousal or child support, student loans, certain taxes, and debts owed under a criminal restitution order.
Only certain individuals can file for Chapter 7 bankruptcy. If a debtor’s current monthly income is higher than the median income for the state, the debtor must pass a means test to be eligible for Chapter 7 bankruptcy. A Dallas Fort Worth Chapter 7 bankruptcy attorney can help you determine whether you meet this threshold. The means test assesses whether a debtor has sufficient income left over after paying required debts and allowed expenses at the end of each month to repay a portion of his or her unsecured debts, such as medical bills and credit card bills.
In conducting the means test, the court will look at the debtor’s monthly income for the past five years and the amount of the debtor’s non-priority unsecured debts. A debtor who does not meet the means test can overcome the presumption that Chapter 7 bankruptcy is not appropriate only by showing that special circumstances justify an adjustment of their current monthly income or additional expenses. Otherwise, the case will be converted to a Chapter 13 bankruptcy filing or dismissed.
Worrying about debts that you cannot pay can be consuming. If you are burdened by debts, you should confer with an attorney to discuss whether you may be eligible for relief via bankruptcy. The bankruptcy attorneys at Powell Law Offices have offices in Grapevine and McKinney, and we regularly help people file for bankruptcy throughout Dallas and Tarrant Counties. We can be reached via our online form or at (972) 584-9382 to schedule a free and confidential conference with a Chapter 7 bankruptcy lawyer in Dallas Fort Worth regarding your debts.