Bankruptcy Frequently Asked Questions

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

 

The main difference between Chapter 7 and Chapter 13 bankruptcy is how debts are handled.
Chapter 7 bankruptcy eliminates qualifying unsecured debts, such as credit cards and medical bills, usually within a few months.
Chapter 13 bankruptcy reorganizes debts into a court-approved repayment plan lasting three to five years, allowing you to catch up on missed payments while keeping your property.

An experienced Amarillo bankruptcy attorney can help determine which option is best for your financial situation.

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Do I qualify for Chapter 7 bankruptcy in Amarillo?

 

To qualify for Chapter 7 bankruptcy in Amarillo, you must pass the bankruptcy means test, which compares your income to the Texas median income and evaluates your disposable income. Most individuals and families in Amarillo qualify, especially after job loss, medical issues, or reduced income.

Attorney David Enos can review your finances and determine whether Chapter 7 is an option for you.

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How long does Chapter 7 bankruptcy take in Amarillo?

 

Most Chapter 7 bankruptcy cases in Amarillo are completed within three to four months from filing to discharge. During that time, you are protected from creditors and collection efforts.

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Is bankruptcy a good option for credit card debt and medical bills?

 

Yes. Chapter 7 bankruptcy is often very effective at eliminating unsecured debts like credit cards and medical bills. Chapter 13 bankruptcy can also reduce or reorganize these debts through a repayment plan.

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What happens at the 341 Creditor's Meeting?

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Watch this video for an example of a Chapter 7 creditor meeting.

 

Do you have to have a certain amount of debt to file?

 

No. However, some situations may not warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due. If you have little property or money, filing bankruptcy may not be necessary, as the creditor may not be able to collect the debt. 

 

Will bankruptcy stop creditor harassment and lawsuits?

 

Yes. Filing for Chapter 7 or Chapter 13 bankruptcy triggers an automatic stay that immediately stops most collection actions, including:

• Creditor phone calls

• Collection letters

• Wage garnishments

• Lawsuits

• Foreclosure proceedings

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An Amarillo bankruptcy attorney can explain how quickly these protections take effect.

 

What is a Discharge Order?

 

At the end of a successful bankruptcy the Court will enter an Order stating that all the debts eligible for discharge are eliminated and that creditors are prohibited from collecting on a discharged debts. The Discharge Order is the main reason you file bankruptcy.​   In order to receive your bankruptcy discharge and have your debts wiped out you must take a Debtor Education Course - which is separate from the first credit counseling course you take before you file. Like the Credit Counseling Class, you can take the Debtor Education course on-line by clicking on the following link  Debtor Education

 

How does Bankruptcy effect my credit?

 

The bankruptcy will show on your credit report for 10 years, but potential creditors will also see that since you filed bankruptcy and no longer owe any debts, your ability to repay a new loan should be great.  See the Establishing Credit After Bankruptcy page for information on how to get your credit score back on track within months of your bankruptcy.

 

What happens if one spouse files for bankruptcy and not the other?

 

If one spouse files and the other doesn't, the one who doesn't file could be responsible for the debts. Review this carefully before filing. 

 

Does my divorce decree protect me from creditors if my ex files for bankruptcy?

 

No. If you are a co-signor with your ex-spouse on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should he default on the loan obligations. 

 

Can a co-signor of a loan be responsible for a debt if the other person has declared bankruptcy?

 

Yes. The lender can require the co-signor to make payments on a loan once the principal has declared bankruptcy on the credit. This makes it extremely important when considering co-signing a loan: Be ready, and able, to pay the loan in the event that the principal signor defaults. 

 

Do I have to file bankruptcy on all the accounts I owe, or can I keep some?

 

You must list all your debts when you file bankruptcy.  However, you can keep some secured debts, such as a car or home loan, and have them survive the bankruptcy This process is called reaffirmation.  The benefit of this is that the debts you reaffirm with report to the credit bureaus and help you re-establish your credit after the bankruptcy is over.

 

Will I lose my retirement accounts or payments from social security?

 

Generally, no. Retirement accounts that are ERISA-qualified aren't considered property of an estate and aren't taken into consideration as assets. Social Security benefits are protected from assignment or garnishment for debts in bankruptcy. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For example, money in a bank account where the "only" deposits into the account are direct deposits of Social Security benefits are identifiable and generally protected. 

 

How often can you file for bankruptcy?

 

Chapter 7: Can be filed every 8 years from a previous chapter 7 filing or 6 years from a prior chapter 13 filing. Chapter 13: Can be filed 4 years from a prior Chapter 7 filing or 2 years from a prior Chapter 13 filing. ​