We understand that you have questions about filing for bankruptcy and retaining a Brownsville bankruptcy attorney. Below are a few common bankruptcy questions and answers.
What is bankruptcy?
Federal law offers a legal proceeding, bankruptcy, that can protect you from creditors while a plan for paying them back is formulated.
Will filing for bankruptcy affect my credit?
It will. However, most people on the brink of bankruptcy already have a poor credit history filled with missed payments and heavy debt loads. Your bankruptcy will remain on your credit history for ten years. However, some creditors may view you as a positive risk post-bankruptcy because your debts have been discharged and you are less risky as you appear able to pay your bills.
Which court do I file for bankruptcy in Brownsville?
Bankruptcy protection is provided for under federal law, which means you'll need to file in a federal court. In McAllen and Brownsville, you can file for bankruptcy at a Texas Southern District Court.
What does bankruptcy do?
Bankruptcy offers protection from creditors and bill collectors. For example, it can stop wage garnishments, halt the foreclosure process, restore utility service, stop car repossessions, stop debt collection calls, and potentially discharge your debts (meaning you won't have to pay them off).
What does bankruptcy NOT do?
Bankruptcy will not discharge secured debt or eliminate a mortgage or a lien on your house. For example, home and car loans require collateral (your home or your car). If those loans are not paid, the lender can take your collateral (your home or your car).
In addition, some debts such as criminal fines, taxes, court orders, alimony, child support, and some student loans are not dischargeable under bankruptcy. If you have a loan that has been co-signed by another party, that loan will not fall under bankruptcy protection; instead, the co-signer will be held responsible for paying the loan off.
Which type of bankruptcy is right for me?
Federal law provides four different types of bankruptcy protection: Chapter 7, Chapter 11, Chapter 12, and Chapter 13. Whether you are an individual, business entity, public agency, or family farmer will largely determine which type of bankruptcy to file. If you are an individual, you will have two options: Chapter 7 and Chapter 13.
Chapter 7 requires you to surrender non-exempt property exceeding specified limits which will later be sold to pay off creditors. Chapter 13 bankruptcyrequires you to create a repayment plan to repay your creditors. This plan must be approved by a bankruptcy judge.
What are bankruptcy exemptions?
Certain types of property are exempt from creditors. Exemptions are subject to limits. Examples include: pensions, some insurance benefits, burial plots or family heirlooms, and tools of the trade.
I have heard that student loans cannot be discharged in bankruptcy? Is this true?
Unfortunately, it's mostly true. There are two exceptions, but they're not common.
- A student loan may be discharged if it imposes an “undue hardship” on you or your dependents.
- Student loans not insured or guaranteed by a government agency, or student loans issued by non-profits may be discharged.
Don't see your question listed? Call our office and get your bankruptcy questions answered.