Bankruptcy Overview

Chapter 7 Bankruptcy – Liquidation

Houston Texas Lawyer for Help with Debt & Financial Trouble

Chapter 7 Bankruptcy is often called “Liquidation” which refers to the fact that Chapter 7 bankruptcy cancels your debt after “liquidating” or selling certain property.  However, there are certain exemptions which allow most people who file Chapter 7 to keep their personal property.

Examples of exemptions include allowances for your primary home, your car, your retirement account and even jewelry. People filing for a Chapter 7 bankruptcy need not necessarily give up, sell or “liquidate” all of their personal property.  Houston Bankruptcy lawyer Dan Kirby can help you determine how the exemptions would apply to your specific situation. 

Types of Debt that Chapter 7 Bankruptcy CAN HELP With

Chapter 7 is meant to help people possibly eliminate all unsecured debt.  Unsecured debt is usually debt where there is no collateral involved, like consumer credit cards issued by banks or other cards issued by clothing stores. In addition to all types of credit cards, unsecured debt also includes payday loans, medical debt and even cash advances on credit cards.

Types of Debt that Chapter 7 Bankruptcy Does NOT Cover

Secured debts, like a mortgage for a home or a loan for a car are NOT dischargeable through a Chapter 7 Bankruptcy.  However, you can possibly keep this type of property, if you are current on the secured debt associated with such property at the time of filing. There are cases where you may want to use Chapter 7 bankruptcy to get out from under either a home loan or an auto loan.  Typically, this is done when the value of the car or home is less than the amount borrowed on the loan.  If you are considering using bankruptcy to eliminate a home or auto loan, Dan Kirby can help you review and make a plan for the best strategy. 

Two other types of debts that are not covered by Chapter 7:

  • Student Loans – You can NOT discharge a student loan through bankruptcy. They are federally guaranteed and there is almost no way to get out of paying back a student loan.
  • Tax Debt – You can NOT discharge tax debt either owed to the Federal Government (IRS) or the State of Texas.

Chapter 7 Bankruptcy and Medical Debt

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People who live in Texas and go through large and complex medical procedures often need to look to the U.S. Bankruptcy Code for protection. Not only do medical issues often force people away from work, but they also can leave patients with gigantic medical bill balances, even if they were covered by insurance at the time of the procedure.

There is a common misconception that medical debt cannot be discharged in a bankruptcy. Medical debt absolutely CAN be discharged (eliminated) in bankruptcy. If you have outstanding medical debt and want to learn how bankruptcy can help – contact Dan Kirby for a free consultation today.

Meeting of the Creditors

There will be a meeting of the creditors, called a “341 Meeting” to give your creditors an opportunity to dispute your bankruptcy or the discharge of your debt.  Your bankruptcy Trustee will be present and may have questions. There are rarely any objections from credit card companies, and this is usually a very quick and straightforward hearing.  However, if there is any reason for concern at this meeting, we will discuss that in depth so you will be prepared and know what to expect.

Free Consultation for People Exploring their options under Chapter 7 in Houston Texas

If you are considering bankruptcy to help get you out of a difficult financial situation with credit cards, payday loans, medical debt or other unsecured debt, and want to get a fresh start, take advantage of a free initial consultation.  Dan Kirby will explain how Bankruptcy Law applies to your specific situation and help you understand the protections offered to you under the U.S. Bankruptcy Code.