Bankruptcy

For many individuals and businesses, the prolonged downturn in the economy and continued job losses have made it difficult for them to meet their financial obligations, while still providing for themselves and their family. If you are feeling overwhelmed by creditors or facing the possibility of foreclosure, bankruptcy may be the solution you are looking for.

Bankruptcy is a legal proceeding for individuals and organizations that can no longer pay their creditors. By liquidating their assets to pay their debts or by creating a repayment plan, bankruptcy allows debtors to get a fresh start. Federal courts have exclusive jurisdiction over bankruptcy cases and most cases are filed under the three main chapters of the Bankruptcy Code—Chapter 7, Chapter 11 and Chapter 13.

• Chapter 7—Allows you to eliminate all unsecured debt, including judgments, credit card debt and medical bills. A Chapter 7 filing allows you to stop creditors from wage garnishment and the collection of judgments. To qualify you must pass the Means Test.
• Chapter 11—Typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A chapter 11 debtor usually propose a plan of reorganization to keep its business alive and pay creditors over time.
• Chapter 13—A filing under Chapter 13 is a viable option if you are seeking to restructure debt while protecting secured assets, such as a home or car. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. You must still make all mortgage payments that come due during the chapter 13 plan on time. Finally, it acts like a consolidation loan under which the individual make the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

Filing bankruptcy is a serious decision with consequences that last several years. There are many situations that may not warrant a bankruptcy filing. To discuss your debt relief solutions and bankruptcy options contact our Lakeway lawyers at (512) 501-6270.