Smith County Bankruptcy Blog

Cannabis has been a difficult topic for companies seeking protection in Texas and across the country. As cannabis is legalized for recreational or medical use in a growing number of states and decriminalized in many more, the number of businesses associated with cannabis has grown. At the same time, some of these companies have failed and sought protection in bankruptcy courts. Overall, these companies have had a difficult time with many courts holding that the continuing federal criminalization of marijuana means that these companies can find no relief in the bankruptcy laws.

One Chapter 13 bankruptcy case involves the issue of medical marijuana but in a personal bankruptcy rather than in a corporate filing. Chapter 13 bankruptcy is an option that can help people to keep their assets while they pay off their debts in a court-approved payment plan. For people who make too much money to be eligible for Chapter 7 bankruptcy but still face crushing debt, Chapter 13 can be an important step toward debt relief. In order to construct the plan, the court will deduct monthly expenses to determine how much disposable income the debtor has.

A research study from the American Bankruptcy Institute indicates that people in Texas and across the country have double the likelihood of filing for bankruptcy if they have had a gap in health insurance coverage of at least two years. The study included information from the Bureau of Labor Statistics for more than 12,000 people and found a strong link between consumer bankruptcy filings and health insurance coverage interruptions.

The statistical link was present even when researchers controlled for things like debt-to-income ratio and earnings overall. Health insurance coverage interruptions were often related to other factors that can cause bankruptcy, like divorce, health issues and lower annual incomes. It is common for people who have health insurance to get coverage via their jobs, so an interruption of employment might interrupt both income and health insurance coverage. Moreover, health problems can sometimes lead to instability in employment. Prior studies have shown that more than 66% of bankruptcy filings are linked to medical problems.

Many people in Texas are struggling with insurmountable debt burdens, annoying or harassing collection calls and difficult financial circumstances. They may be looking for an exit to a new financial future that can offer significant debt relief. People who are unable to pay their debts may turn to personal bankruptcy as a solution that helps them move forward with their lives. There are two major types of personal bankruptcy: Chapter 7 and Chapter 13. The right type of bankruptcy for each person may vary depending on financial circumstances, property ownership and other issues.

A Chapter 7 bankruptcy involves liquidating assets and selling them to pay off creditors in part. After the bankruptcy is completed, all eligible debts will be eliminated. Not all debts can be addressed in bankruptcy, including student loans and child support obligations. However, people must generally liquidate their property beyond the exceptions allowed under law. In addition, there is a means test to determine eligibility for Chapter 7 bankruptcy. Only people who make the median income in their state or below are eligible to file for this type of bankruptcy, making it unsuitable for high earners who also have unsustainable debts.

Far too many people conflate bankruptcy with poverty. It is possible for individuals with successful careers and high income to wind up over their heads and struggling to make ends meet. You can be a homeowner with a stable source of income and still find yourself precariously close to foreclosure because of your debt.

The good news for people struggling to stay afloat financially is that bankruptcy protections can often make all the difference when they fall behind on mortgage payments. Chapter 13 bankruptcy allows you unique opportunities to protect your equity in your home and take control of the debt that is causing your current issues.