In these current economic conditions, it is becoming harder and harder to stay afloat financially. With bills piling up and creditors becoming more aggressive about collecting debts, people can sometimes feel like their situation is hopeless. Fortunately, the Federal Government recognizes these hardships and long ago passed a law to help civilians deal with these mounting pressures in an economical and stress-free manner.

Although it is rarely a person’s first choice of recourse, bankruptcy is sometimes the best. Filing for bankruptcy forces most creditors to stop contacting you and allows most people to either restructure their debts in a much more manageable form or get rid of the overwhelming majority of their debt. As with any type of needs-based governmental assistance, bankruptcy relief is tied to a person’s income and ability to pay for bills as they come due. Due to the complex calculations used to determine eligibility, you may be surprised to find that even those people typically defined as wealthy may in fact qualify to file for bankruptcy.

Chapter 7 Bankruptcy in Texas

Chapter 7 is what most people envision when they think of filing for bankruptcy. It is commonly referred to as a liquidation bankruptcy, because it allows a person to eliminate almost all of their debts and in most cases keep nearly all of their property.

As discussed above, bankruptcy is a needs-based governmental initiative and that is enforced through the Means Test. The Means Test can be looked at as the doorway to bankruptcy relief. Basically, it involves calculating a person’s monthly income, with several adjustments, and comparing it to the average income for his state. If the computed income is less than the state average, he has passed the first test and most likely will be granted Chapter 7 bankruptcy relief.

If a person decides that he can pass the Means Test, he can begin the bankruptcy process by filing a petition. This filing triggers the “automatic stay”, and the creditors are required to stop making any attempts to collect a debt, including phone calls and attempts at foreclosure or repossession. With the petition, a person files multiple “Schedules” and statements, listing out their income, expenses, debts, and assets. From these Schedules and other accompanying documents, a Bankruptcy Trustee (the person assigned by the court to oversee your case) will decide whether he is eligible to receive Chapter 7 bankruptcy relief.

One of most important aspects of a Chapter 7 bankruptcy is it allows someone to exempt certain property and therefore keep creditors from using it to satisfy their debts. In fact, in most cases all of the filing debtor’s property is exempt. What a person is allowed to claim as exempt varies from state to state. Texas law generally exempts a debtor’s home, furniture, furnishings, motor vehicles, and additional personal property up to a certain dollar amount. Once the Trustee sells the debtor’s “non-exempt” property, if any, and distributes the proceeds to the creditors, the Bankruptcy Court discharges the debtor’s remaining debt (other than alimony and child support, student loans, most tax obligations, and debts resulting from fraudulent or malicious acts) and concludes the bankruptcy proceeding.

Intake form, found here

The following is the process followed at Brown, McHam and Associates for Chapter 7 cases:

1. Initial Consultation (Free of charge)
   

   * Please bring a filled out Bankruptcy Intake form, found here, to this meeting.

   At this free consultation, you will meet with an attorney and discuss your financial situation and bankruptcy options. If you and the attorney agree that a Chapter 7 bankruptcy is your best option, you will hire Brown, McHam and Associates, as your representative in the bankruptcy. In addition, you will be given paper work to fill out and a list of documents needed for this process, (such as tax returns, pay stubs, etc.).

2. Second Meeting
   

   This meeting will typically occur within one week after the initial consultation. At this meeting, we go over your paper work with you to ensure that we have all of the necessary information.

3. Third Meeting
   

   This meeting is the last step toward filing and can occur within a few days after the second meeting. You will review all of the documents and sign the petition. This is the document that will then be filed with the court.

4. Filing
   

   After the signing meeting, we will file your case and send a notice all of your creditors. Getting to this point will usually take between two days and several weeks, depending on the urgency of your case and your work schedule.

5. 341 Meeting
   

   The 341 Meeting, also known as the meeting of creditors, will occur roughly thirty days after the petition is filed and will give the creditors that show up at chance to ask you questions about your assets. The meeting will typically occur at the Bankruptcy Court Offices on the corner of San Jacinto and 9th Street in downtown Austin.

6. Discharge
   

   You will receive your discharge about two to three months after the 341 meeting. This is the last step in the bankruptcy process. At that point, you do not owe any of the unsecured creditors that were discharged in the Chapter 7 bankruptcy.

If you have any questions regarding this process, please give us a call at 512-436-0826 and set up a consultation.

Helpful Bankruptcy Links

In order to file for your bankruptcy, your attorney will need detailed information about your assets and liabilities. The following links are provided to assist you with valuing your assets and obtaining more information on the bankruptcy process.

U.S. Bankruptcy Court - Western District of Texas

The official site of the United States Bankruptcy Court for the Western District of Texas. The Court has several locations ("divisions"): Austin, El Paso, Midland, San Antonio, and Waco. Each location serves different counties. The website provides a variety of helpful information and useful links.

Bankrate.com

Bankrate.com provides information on mortgage rates, CD rates, auto loans, credit cards, mortgages, personal finances and more.

TransUnion.com

Experian, Equifax, and TransUnion are the three major credit bureaus. TransUnion's site offers online access to your credit report, credit management and education services, and a variety of other helpful information and useful links.

Experian.com

Experian, Equifax, and TransUnion are the three major credit bureaus. Experian's site offers online access to your credit report, credit management and education services, and a variety of other helpful information and useful links.

Equifax.com

Experian, Equifax, and TransUnion are the three major credit bureaus. Equifax's site offers online access to your credit report, credit management and education services, and a variety of other helpful information and useful links.

Nada Auto Values

The National Automobile Dealers Association allows you to figure out the current value of any automobile, motorcycle, or boat you may own.

Kelly Blue Book

The Kelly Blue Book is an alternative automobile valuation tool which also gives additional information about that vehicle (such as average miles per gallon and features).

Zillow.com

Zillow.com allows you to compare your home to similar homes for sale in your neighborhood to determine the approximate market value of your home.

Ebay.com

Ebay is an online marketplace that you can use to figure out what personal items you have may be selling for.

The intake form has been posted to speed up the filing process and allow you to properly prepare for the attorney meetings. It is not contracts in-and-of itself and no attorney-client relationship is formed until the employment contract is signed. Pursuant to 11 U.S.C. §528, “We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”