Chapter 7 Bankruptcy in Dallas Fort Worth

  Chapter 7 bankruptcy discharges (eliminates) certain debts and gives honest individual debtors a fresh start.  Filing for this chapter of bankruptcy is sometimes referred to as filing a "straight" bankruptcy.  Some types of debts such as certain taxes, student loans, and child support obligations are not usually dischargeable.  A Chapter 7 bankruptcy filing in the Dallas / Fort Worth Texas area generally takes 4 months to complete once the case is filed.  Clients normally attend only one creditor meeting and do not have to go to court.

            When you file bankruptcy an automatic stay normally goes into effect.  This stay immediately stops your creditors from attempting to collect debts from you.  Creditors can not go after your car, house, or other property until the stay is lifted.  The automatic stay will also stop most lawsuits against you.

            In a Chapter 7 bankruptcy filing all of your non-exempt property can be collected and sold to repay your debts.  Exempt property is not sold.  Any debt that is left is then discharged.  Most people in the Fort Worth and Dallas, Texas areas do not lose property in a Chapter 7 bankruptcy because all of their property is exempt.  Your house, car, furniture, clothes, and personal belongings are common examples of exempt property.  

            When property serves as collateral for a loan, the loan is called a secured debt.  Common examples of secured debts are mortgages, car loans, and motorcycles and boat loans.  A bankruptcy takes away your obligation make payments on secured debts, but does not take away the lenders right to foreclose on or repossess the property.  In other words, if you want to keep the property you must continue making payments. 

            At the end of the bankruptcy process, your debts are wiped out by the court.  You no longer legally owe your creditors. 

           The new bankruptcy law attempts to make it harder to qualify for Chapter 7.  Two of the new hoops that consumers seeking Chapter 7 bankruptcy protection must jump through before filing are the Median Income Test and, in some cases, the Means Test. 

           The Median Income Test compares your income to the median income for a family of your size in Texas.  If your income is below the median then you are not required to perform the Means Test.  If you are above median then you, or your attorney, must perform the Means Test. 

           The Means Test is a complex mathematical formula that uses IRS and Census Bureau data to determine if your case will be presumed to be abusive.  Although it is more difficult for some people to qualify for Chapter 7 bankruptcy now because of the Median Income Test and the Means Test, the overwhelming majority of people who would have qualified for Chapter 7 bankruptcy under the old law still qualify under the new law.

For more information see the Bankruptcy FAQ.

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