Some Texas residents who are overwhelmed by their financial obligations may wonder whether they should file for a Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy involves liquidating non-exempt assets while in a Chapter 13 bankruptcy, a person creates a payment plan to repay creditors over a period of three to five years. This allows the person to keep some assets.
A person who is filing for a Chapter 13 bankruptcy needs to have the income to repay the debt. It is necessary to determine what property owned by the debtor is considered exempt and what property is non-exempt. In order to create a repayment plan, the value of non-exempt property is added up as a minimum of what must be offered as repayment.
Laws vary considerably among jurisdictions regarding what type of property is exempt. However, it is generally property that the person needs, such as furniture, clothing and other personal items. A home and a vehicle may also be included since the person needs a place to live and may need a vehicle to get to work.
People who are considering filing for bankruptcy may want to talk to an attorney about options for debt relief, their eligibility for bankruptcy, what property is exempt and what their payment plan would look like. Many people may be hesitant to file for bankruptcy because it can affect their credit score. However, ongoing debt also affects a credit score, and filing for bankruptcy allows a fresh financial start. All creditor action must stop as soon as a bankruptcy filing is made, including a foreclosure. The process of filing for bankruptcy can be complex, and it is important to complete forms accurately to avoid delays.
