“WHAT ABOUT CHAPTER 7?”
Chapter 7 is called the liquidation chapter, because the idea is that if a debtor has more property than the law protects (exempts), the chapter 7 trustee may take the unprotected property from him or her and sell it to pay the debts.
But my typical clients are persons who own only one house. They don’t have any other real property. If that’s the case, they can’t lose their house, because the law exempts it from seizure. The law also protects one or two cars or pick up trucks, or whatever you drive, from seizure. It also exempts or protects pensions, profit sharing plans, wages, tools of the trade, household goods, appliances, clothing, and a lot of other necessary assets. Sometimes it even protects income tax refunds, (but not always). So, in reality, most people don’t lose any assets when they file a chapter 7. Therefore, in most cases there is no “liquidation”. In my experience, “liquidation” has occurred only when a small corporation files bankruptcy, because it is not making any money, and the trustee takes over whatever assets the corporation has and sells them to pay the debts. However, most of the small corporations I have handled had no assets left by the time they filed bankruptcy, so even these didn’t give up anything in bankruptcy. In my more than ten years of practicing in the bankruptcy field, I have never seen a true “liquidation” case, because my clients usually have no assets that warrant liquidation.
In Chapter 7 all unsecured debts, such as hospital, doctor or lawyer bills, credit cards, deficiencies that are the result of repossessions or foreclosures, signature loans, pay day loans, etc., are completely, irrevocably discharged, unless they were incurred by the debtor’s fraudulent acts. Since all my clients are honest debtors, I have never seen an instance of fraudulent acts.
The only debts that are not discharged are: mortgages, car loans, some student loans, certain federal and state income taxes, all property taxes, secured loans, loans obtained for the purpose of paying taxes, and, as stated before, debts that are incurred as a result of fraudulent conduct.
To qualify for a Chapter 7 without hassles from the U. S. Trustee you have to earn an income that is below the state median. (We’ll give you guidance on this.)
Your income and that of your spouse are taken into consideration even if your spouse is not filing. If you and your spouse exceed the state median income, but have a large family, you might still qualify for a Chapter 7, because the state median income takes into account the size of the debtor’s family and the expenses incurred to support a large family. The larger the family, the greater the living expenses and the less disposable income there is. We explore all possibilities and leave no stone unturned in order to assist our clients in finding the right fit.
Please call our office for information on our current fee for Chapter 7. These amounts include the filing fees. Some of my clients pay the fee in one lump sum. Others pay in installments. However, the petition will be filed after the fee has been completely paid.
Our Chapter 7 practice is limited to the State of Texas only.
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