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How to File for Bankruptcy in Texas

There are several different types of bankruptcy that may be available to you, depending on your circumstances. The most common types of bankruptcy for individuals are those filed under Chapters 7 and 13 of the U.S. Bankruptcy Code. However, there are some circumstances in which individuals can file bankruptcy under Chapters 11 and 12 of the U.S. Bankruptcy Code, as well.

Chapter 7 Bankruptcy – Liquidation

Chapter 7 bankruptcy cases may be referred to as “straight” or “liquidation” bankruptcies. Both an individual and a business may be eligible to file bankruptcy under Chapter 7. In a Chapter 7 bankruptcy case, the U.S. Bankruptcy Court will appoint a bankruptcy trustee who will be responsible for overseeing the case. The trustee’s job is to collect and sell all property belonging to the debtor in order to pay off his or debts. This doesn’t mean that the trustee can take all of the property that a person owns. Some property is “exempt” under state bankruptcy laws, and the trustee has to allow the debtor to keep exempt property in a bankruptcy proceeding.

After the trustee has sold all non-exempt property belonging to the debtor and applied the proceeds of any sale to the debts, the debtor will receive a bankruptcy discharge. This means that most creditors, or the people or companies to whom the debtor owes money, will no longer be able to collect the debts owed by the debtor. Some debts, however, are non-dischargeable in bankruptcy, such as federal student loans. This means that the debtor still will have to pay those debts following a bankruptcy discharge.

Chapter 13 Bankruptcy – Repayment Plan

A Chapter 13 bankruptcy may be appropriate for individuals or the operators of small businesses whose debts are under certain limits and who have the ability to pay back at least some of their debts. A debtor can propose a reorganization of his or her debts in a Chapter 13 bankruptcy, which may allow creditors to get their money paid back in part or in full over a three to five-year period. Creditors get to vote on whether to approve a debtor’s Chapter 13 plan, and the bankruptcy judge must also approve the plan. The individual makes payments to the bankruptcy trustee according to the terms of a Chapter 13 plan, and the trustee distributes the payments to the creditors. After the term of the plan expires, most remaining debts are discharged and the debtor no longer has to pay the creditors back.

Chapter 11 Bankruptcy – Reorganization of Debts

Chapter 11 offers bankruptcy protection for individuals or businesses that have substantial debts and/or income and wish to reorganize their debt in order to pay it off. There are no limits on the amount of debt that an individual or business can have in order to participate in a Chapter 11 bankruptcy proceeding. As in a Chapter 13 bankruptcy case, creditors vote whether to accept a debtor’s plan of reorganization and the court must approve the plan, as well.

Chapter 12 Bankruptcy – Family Farmers

Chapter 12 provides bankruptcy relief for those who qualify as “family farmers” under the U.S. Bankruptcy Code. Those individuals who qualify for this sort of bankruptcy relief will repay creditors from future income over time, according to a plan approved by the court.
All of these types of bankruptcy may be available to you, according to the facts and circumstances surrounding your financial situation. At Kealy Law, we are familiar with all types of Colorado bankruptcy proceedings and know how to advise you about the best course of action for your situation. Contact our office today and learn how we can help you or your business resolve your financial issues.