Experienced Texas Chapter 7 Bankruptcy Lawyer

No one ever starts their adult life anticipating they will need to file bankruptcy, but it happens to an increasing number of Americans every day. When most people think of bankruptcy, they often think of a Chapter 7 proceeding, sometimes referred to as a liquidation bankruptcy. The Chapter 7 bankruptcy process enables you to get rid of all dischargeable debts. However, all nonexempt assets you own will be liquidated (sold), and the proceeds will be paid to their creditors.

The Texas bankruptcy firm of William H. Lively, Jr. WHL, PLLC, serves clients in Tyler, Gregg County, Smith County, as well as statewide. Our founding attorney, Bill Lively, has worked with everyday Texans for more than 25 years and has handled more than 7,000 bankruptcy cases. He understands that life happens, and sometimes the most responsible way to address escalating debt from medical bills, credit cards, utilities or other sources is to start with a fresh slate.

To learn more about Chapter 7 bankruptcy or for a free consultation, please call us in Tyler at 903-920-0008 or complete our contact form.

How Chapter 7 Bankruptcy Works In Texas

Chapter 7 bankruptcy works by discharging many types of debt. In exchange, the debtor is required to liquidate (sell) items of property and the proceeds from the sales go to creditors. A bankruptcy trustee is assigned by the court to oversee the process. In Texas, many types of property are exempt (protected) from liquidation, including homes, cars, personal possessions, retirement accounts and pensions.

Timeline for Chapter 7 bankruptcies

Most Chapter 7 bankruptcy cases take about four to six months from the date of filing to reach a final discharge of debt. If you hire a bankruptcy attorney, they will meet with you to evaluate your financial situation and help you fill out the petition. Once your petition is filed, an automatic stay will block creditors from contacting you or continuing collection actions. You will attend a mandatory meeting called the Meeting of Creditors (or 341 meeting), where the bankruptcy trustee will review your financial documents and ask you questions under oath. While creditors are legally permitted to attend, they rarely do in standard consumer cases. Under federal law, you must complete two separate educational requirements: a credit counseling course before you are eligible to file your bankruptcy petition, and a financial management course after filing to receive your final discharge.

Once the process is complete, the burden of debt will be removed and you will have a fresh start financially.

Amount of dischargeable debts in Chapter 7 bankruptcies

There is no cap on how much debt you can discharge through Chapter 7 bankruptcy, unlike when using Chapter 13. This feature of Chapter 7 bankruptcies can be attractive to debtors who have a lot of unsecured debts, including credit cards or personal loans.

Exemptions in a Texas Chapter 7 bankruptcy

While the U.S. Bankruptcy Court is a federal court, each U.S. state sets exemptions to Chapter 7 liquidation standards. In Texas, bankruptcy filers may choose either Texas exemption provisions or the standard federal exemptions. Here are some of the key Texas exemption provisions that can protect the property and possessions that matter most to you:

Homestead exemption. The state legislature understood that Texans regard their primary residences as one of their most precious assets and created a homestead exemption that protects an unlimited amount of equity in the dwelling you live in most of the time. Under Texas law, you may include up to ten acres of attached property in a city, village or town. Your protected rural homestead can include up to 100 acres for a single individual and up to 200 acres for a family. This exemption does come with the caveat that you must have owned the property for 1,215 days before your bankruptcy, so consult with a Texas bankruptcy attorney to review your alternative strategies to preserve your home if you don’t meet this qualification.

Motor vehicle exemption. Texas is a large state, and cars, trucks and other vehicles are essential to work and daily life. Texas law allows you to protect one vehicle per licensed household member. While there is no specific dollar limit on the vehicle’s value, its equity does count toward your overall personal property exemption limits ($50,000 for an individual and $100,000 for a family).

Personal property exemption. Texas sets the exemptions for personal property at $50,000 for an individual and $100,000 for a family. The items you own that count toward this exemption limit include:

• Furniture and home furnishings
• Clothing and food
• Tools, books and equipment related to your trade or profession
• Commercial boats
• Farm and ranch vehicles
• Two firearms
• Jewelry (limited to $12,500/person or $25,000/family)
• Bicycles and other sporting equipment

There are other items that are exempt but not included in the personal property limit. Those include Bibles or other sacred texts, your current wages (minus any court-mandated support payments) and burial plots.

Retirement account exemption. Federal law allows debtors filing Chapter 7 to keep the value of their retirement accounts from a wide variety of sources, including 401(k)s, 403(b)s, SEP plans and SIMPLE IRAs, among others. Texas adds several other types of exempted accounts, including:

• Pensions and retirement plans for teachers, municipal employees, state employees, judges and county employees
• Firefighter and police officer pensions and retirement plans
• Other types of qualified retirement plans.

If you aren’t sure if your retirement plan is covered, our Texas Chapter 7 bankruptcy attorney can advise you of your options.

Debts you cannot discharge in a Chapter 7 bankruptcy

While there are no limits to dischargeable debts in Chapter 7, under current bankruptcy laws, you are generally not permitted to discharge the following types of debt:

• Student loans
• Certain types of tax debts
• Unpaid child support and alimony
• Fraudulent debts of any kind

While student loans and taxes are a problem for many people, often it is things like credit card debt and medical debt – which generally can be discharged – that are the most burdensome. Chapter 7 will let you eliminate your credit cards in most cases, but there are certain stipulations that need to be examined. Your Texas bankruptcy attorney will be able to advise you on what is dischargeable and what is not. If you want to keep properties that are secure, you have to sign reaffirmation agreements in most cases.

Frequently Asked Questions About Chapter 7 Bankruptcy

Below are answers to common questions about how the process works and what to expect.

When should I consider filing for Chapter 7 bankruptcy?

Everyone’s financial picture is different, but three guidelines may help you determine whether a Chapter 7 bankruptcy makes sense.

1. Do you have overwhelming unsecured debt (credit card, utility bills, medical expenses) that you cannot pay back within three to five years?
2. Does your current income and expenses leave you with no disposable income with which to pay back debts?
3. Would the automatic stay associated with a Chapter 7 bankruptcy allow you to avoid wage garnishments, utility shutoffs, or harassment and lawsuits from creditors?

If you can answer “yes” to all three, you’ll want to reach out to an experienced Texas bankruptcy lawyer to discuss your options. They can also advise you on special situations, such as bankruptcy during divorce or bankruptcy for business owners.

Will filing for bankruptcy ruin my reputation or make me look irresponsible?

Bankruptcy filing in Texas carries far less stigma today. Millions of Americans face financial hardship due to job loss, medical bills or economic downturns. Filing is a responsible way to resolve unmanageable debt rather than avoiding it. Proceedings are confidential and not publicized in local media.

Will my family’s life be upended if I file for Chapter 7 bankruptcy?

It does not have to be. Whether you have small children at home or in school, or you and your spouse are weighing the best way to address debts that seem to have gotten out of hand, hiring a Texas Chapter 7 bankruptcy attorney to guide you through the process can help you make smarter decisions. The result can be less family stress and a fresh financial start.

Will I lose my home if I file for Chapter 7 bankruptcy?

Losing your home is not inevitable when filing Chapter 7 bankruptcy. Texas homestead exemptions provide strong protection for primary residences regardless of value, allowing most filers to keep their homes. If you remain up to date and your equity falls within exemption limits, you can retain your property through and after bankruptcy.

Can I keep my car during Chapter 7 bankruptcy?

Keeping your car depends on equity amounts and available exemptions. Texas law allows one exempt vehicle per licensed household member up to certain value limits. If you keep up with your loan payments, you can usually keep your car as long as its equity – combined with the value of your other personal belongings – does not exceed the total personal property limit of $50,000 for an individual or $100,000 for a family.

How quickly can I rebuild my credit and financial life after Chapter 7?

Credit rebuilding starts soon after discharge, though bankruptcy remains on credit reports for ten years. Many filers obtain secured credit cards within months, using them to build a positive payment history. Timely bill payments, maintaining savings and managing new debt wisely help improve credit faster. Some qualify for FHA mortgages within two years, often with gradually improving interest rates.

Find Out How Filing Chapter 7 Can Help You

Many view bankruptcy in a negative light, but there are benefits to filing for Chapter 7 that can completely free you of debt in a relatively short amount of time. To speak with a lawyer about your situation, please fill out our contact form or call us at 903-920-0008.

Based out of Smith County, William H. Lively, Jr. WHL, PLLC, offers free consultations to Texans statewide, so we encourage you to contact us and learn more about your options today.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.