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How Can Texas Bankruptcy Exemptions Protect Your Assets?
If you are about to file Chapter 7 or Chapter 13 bankruptcy, you may be concerned about losing some important assets, such as your home and vehicle. The good news is that Texas offers bankruptcy exemptions that can protect your home, car, and certain personal property. The best way to get more information about how Texas bankruptcy exemptions can protect you is to contact a Fort Worth, TX bankruptcy attorney.
How Do Exemptions Work in Bankruptcy?
When you file for bankruptcy, your "nonexempt" assets become part of the bankruptcy estate. However, some assets are exempt from bankruptcy, meaning that you may keep these assets after you file bankruptcy. There are federal and state exemptions, and in Texas you may choose either the state or federal exemptions up to a certain amount.
What Are Common Texas Bankruptcy Exemptions?
Texas has a number of bankruptcy exemptions, including life, health, and accident insurance, pensions of certain kinds of employees, burial plots, and even a percentage of unpaid commissions. However, the bankruptcy exemptions that you are likely to utilize most often are on your home, car, and certain personal property.
How Are Personal Loans Discharged Through Bankruptcy in Texas?
Personal loans, also referred to as unsecured loans, are those that are not tied to security or collateral. They are usually paid in a lump sum to the borrower, who pays back the debt in installments. A personal loan can be a lifesaver in times of financial difficulty, but it is also debt that can become a financial burden.
If you are overwhelmed with debt and considering bankruptcy, it is important to understand how filing for bankruptcy can discharge personal loans. For more details and for help with your bankruptcy filing, consult a qualified Texas bankruptcy attorney.
How Does Chapter 7 Bankruptcy Discharge Personal Loans?
In Chapter 7 bankruptcy, the borrower’s assets are liquidated — meaning they are sold off — to pay back creditors. Here is how the process works:
How Do Courts Decide Whether to Discharge Student Loan Debt?
An estimated 43.6 million Americans have student loan debt totaling approximately $1.753 trillion, with the average household owing about $38,000. This can feel overwhelming to a borrower, especially one who has other debts.
It is possible to discharge your student loan debt by filing bankruptcy, though it is not like discharging other types of debt. In Texas, courts look at certain factors and use specific methods when deciding whether to discharge student loan debt, such as the Brunner Test and the Totality of Circumstances Test. The best way to find out if you would qualify for a student loan debt discharge is to consult a Texas bankruptcy attorney who will review your financial situation and advise you on the next steps.
What Is the Brunner Test?
Under 11 U.S.C. § 523(a) (8) (B), a borrower’s student loan debt may be discharged if paying it back would present an "undue hardship." Since the law does not define this term, courts use the Brunner Test to determine what constitutes undue hardship. The Brunner Test comes from a case called Brunner v. N.Y. State Higher Education Services Corp and uses the following three criteria to determine whether a borrower would face undue hardship by repaying student loans:
4 Ways to Rebuild Your Credit After Bankruptcy
Bankruptcy is viewed as a way to pull yourself out of debt and get a fresh start. Like anything else, however, it comes at a cost. Your credit score takes a major hit if you discharge your debts through bankruptcy, making it more difficult for you to obtain new lines of credit like auto loans and mortgages. It can also affect your ability to get approved for checking accounts and credit cards. A Chapter 13 bankruptcy stays on your credit report for seven years, and a Chapter 7 bankruptcy stays on for 10.
It will take time, but you can eventually rebuild your credit after a bankruptcy discharge. This article will discuss four ways to do that, as well as how to contact a Texas bankruptcy attorney for more details.
Apply for a Secured Credit Card
A great way to start rebuilding your credit is to apply for a secured credit card. This is a credit card that requires a cash deposit which is used as collateral in case you default on your debt. If you make your payments on time and keep your outstanding balance low, it can start to improve your credit score. When applying for a secured credit card, make sure the lender will report your payment history to the three major credit bureaus.
When to Choose Chapter 13 Bankruptcy
The main advantage of Chapter 7 bankruptcy is that when liquidation is over, the bankruptcy is over and you can move on quickly. Many people like to avoid Chapter 13 bankruptcy because they do not like the idea of having to put all of their disposable income toward debt repayment for several years or more. However, there are many good reasons to choose Chapter 13. Depending on your personal priorities and how averse to liquidation you are, you may find that Chapter 13 bankruptcy is preferable. An Arlington, TX bankruptcy lawyer can help you decide whether Chapter 7 or Chapter 13 bankruptcy is right for you.
Chapter 13 Bankruptcy Avoids Liquidation
The main benefit of Chapter 13 bankruptcy is that you can avoid having your assets liquidated. Avoiding liquidation is a high priority for many people. If you cannot stand the idea of having some of your assets seized and sold off to repay your debts, Chapter 13 may be your better option.
Debt Relief When a Small Business Fails
The fact is that many small businesses fail within their first year. Even if you had a great concept for a business and are very experienced, there is a chance that your company simply will not be able to stay open. This is often due to factors beyond the control of the business owner. It could be that you opened your business at a time when many of your potential customers were struggling financially, or that you were overshadowed by a larger corporation with a higher advertising budget that opened a new location around the time you opened your doors. If you are planning to close your business, Chapter 7 bankruptcy can help you eliminate your business debt. An Arlington, TX bankruptcy lawyer can help you determine the best course of action.
Why Liquidation Bankruptcy Works for Failing Businesses
Chapter 7 bankruptcy involves selling off your business’s assets to pay off its creditors. Anything owned by your business entity will be liquidated, and the money will be used to pay off any debt your company still owes. When this process is complete, any remaining business debt will be cleared and you can walk away as if nothing happened.
When Can a Bankruptcy Be Dismissed?
Filing for bankruptcy can provide a fresh financial start, but it is not always guaranteed. In some cases, a bankruptcy case may be dismissed. This means the court stops the bankruptcy process, and the debtor loses the protections provided by the automatic stay. A Texas lawyer can help you understand the reasons for dismissal and how to get through the bankruptcy process more effectively.
Common Reasons for Bankruptcy Dismissal
Different factors can lead to the dismissal of a bankruptcy case:
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Failure to provide required documents: The court needs complete and accurate financial information to proceed with your case.
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Missing deadlines: Bankruptcy involves strict timelines. Failing to meet these can result in dismissal.
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Not completing credit counseling: This is a mandatory step before filing for bankruptcy.
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Inability to make plan payments: In Chapter 13 bankruptcy, failing to keep up with your repayment plan can lead to dismissal.
How Does Bankruptcy Affect Student Loans in Texas?
Navigating the complex intersection of bankruptcy and student loans can be challenging, especially in Texas. A Texas lawyer can explain how bankruptcy impacts student loans and what options are available when facing financial difficulties.
What to Know About Bankruptcy and Student Loans
The purpose of bankruptcy is to provide individuals and businesses with a legal avenue to eliminate or repay debts, protected by the bankruptcy court. However, the rules regarding student loans differ from those for other types of debt.
Generally, student loans are not dischargeable in bankruptcy unless the borrower can prove "undue hardship." This standard applies nationwide, including in Texas, making discharging student loans through bankruptcy extremely difficult.
The Brunner Test in Texas
Texas falls under the jurisdiction of the Fifth Circuit Court of Appeals, which uses the Brunner test to determine undue hardship. To discharge student loans in bankruptcy, a borrower must prove all three of the following:
How Bankruptcy Can Provide Relief from Payday Loans
Are you struggling with payday loan debt in Texas? You are not alone. Many people find themselves trapped in a cycle of borrowing and repaying these high-interest, short-term loans. However, there is hope. Bankruptcy can offer a path to financial relief and a fresh start. A Texas lawyer can help you explore how bankruptcy can help you break free from payday loan debt and regain control of your finances.
Payday Loans are Dischargeable in Bankruptcy
One of the most important things to understand is that payday loans are generally dischargeable in bankruptcy. This means that when you file for bankruptcy, you may be able to eliminate your obligation to repay these loans. Both Chapter 7 and Chapter 13 bankruptcy can offer assistance with payday loan debt.
In a Chapter 7 bankruptcy, also known as "liquidation bankruptcy," your payday loan debt can be completely wiped out along with other unsecured debts. This process typically takes 3-4 months and allows you to start fresh without the burden of these high-interest loans.
What Happens to Tax Debt When You File Bankruptcy?
Filing for bankruptcy can provide much-needed relief for individuals struggling with overwhelming debts, including tax debts. However, it is essential to understand that not all tax debts can be discharged through bankruptcy. A Texas lawyer can help you understand what happens to your tax debt when you file for bankruptcy and the specific requirements that must be met for tax debts to be eligible for discharge.
Types of Bankruptcy and Tax Debt
There are two primary types of bankruptcy that individuals can file in Texas: Chapter 7 and Chapter 13. The treatment of tax debt varies depending on the type of bankruptcy filed.
Chapter 7 Bankruptcy and Tax Debt
In a Chapter 7 bankruptcy, certain types of tax debt may be discharged, provided they meet specific criteria. To be eligible for discharge, the tax debt must be income tax debt, and the following conditions must be satisfied:
From our office in Arlington, we serve clients throughout Tarrant County, Dallas County, Parker County, Denton County, Wise County, Dallas, Fort Worth, Irving, Grand Prairie, Bedford, Keller, Euless, Richland Hills, North Richland Hills, Mansfield, Coppell, Kennedale, Las Colinas, Burleson, Azle, Saginaw, Haltom City, Watauga, Southlake, Benbrook, Colleyville, Grapevine, Crowley, Aledo, Roanoke, Trophy Club, Carrollton, Farmers Branch, Richardson, and Hurst, as well as other communities across North Texas.
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