Texas Bankruptcy FAQs

Arlington Bankruptcy and Debt Relief Attorneys

At Acker Warren P.C., we provide trusted guidance and skilled representation to individuals, families, and businesses seeking protection under the U.S. Bankruptcy Code. We have helped hundreds of clients throughout North Texas file for bankruptcy, many of whom had similar questions when they came to us. Here are few of those questions:

Q: What bankruptcy options are available for individuals and families?

A: While there are many different types of bankruptcy, Chapter 13 bankruptcy and Chapter 7 bankruptcy are the most common options for private individuals. Chapter 13 bankruptcy provides for the restructuring of your debts so that you will make one lump-sum monthly payment for several years before the remainder of your eligible debt is discharged. In Chapter 7 bankruptcy, your non-exempt assets may be liquidated to partially satisfy your debts before the remainder is forgiven. In Texas it is uncommon for assets to be liquidated due to our generous exemption laws.

Q: What bankruptcy options are available for businesses?

A: In some cases, a business may need to liquidate its assets through a Chapter 7 bankruptcy in order to repay creditors. A business may also be able to complete a reorganization plan through a Chapter 11 bankruptcy that will allow it to continue operating while repaying debts. In addition, the Small Business Reorganization Act of 2019 created the option for bankruptcy protection under Subchapter V of Chapter 11—commonly referred to as a "Chapter 5 bankruptcy—which allows qualifying small businesses to create a reorganization and repayment plan through a more streamlined and simplified process than a "standard" Chapter 11 bankruptcy and vastly reducing the attorney fees compared to a standard Chapter 11.

Q: Will all my property be liquidated if I file for bankruptcy?

A: Probably not. Fear of the liquidation process stops many people who could benefit from Chapter 7 bankruptcy from even considering the option, often unnecessarily so. If there is a particular asset you still owe money on but really need to keep, you can sign a "reaffirmation agreement" with the lender and continue making payments as usual. Texas state law also carves out generous exemptions to liquidation. In our experience, our clients almost never lose their homes or primary vehicles, or other assets in Chapter 7 bankruptcy. Our skilled attorneys can evaluate if you have property subject to liquidation in a Chapter 7 bankruptcy before a case is filed. If you use Chapter 13, you will not need to worry about liquidation at all.

Q. Will bankruptcy help if I am on the verge of foreclosure?

A: Filing a bankruptcy petition will trigger an automatic stay of any legal proceedings related to your assets and debts. This includes stopping a foreclosure on your home. Our attorneys can help you determine your options for preventing foreclosure and discharging your debts through Chapter 7 bankruptcy, setting up a payment plan through a Chapter 13 bankruptcy, or exploring other options, such as a short sale, refinancing your mortgage, or other types of loan modifications. Our attorneys help you understand your options for avoiding foreclosure, and we will work with you to determine the best strategy for dealing with debts that you are unable to repay.

Q: Which debts cannot be discharged in bankruptcy?

There are several types of debts that are not dischargeable in bankruptcy. In most cases, student loan debt cannot be discharged. This is disappointing to many, as student loans are often a source of significant debt. Payments ordered during a divorce or other family court proceeding, like child support or alimony, are also not dischargeable. Some tax liabilities are dischargeable, but others are not. The last main category is criminal fines and restitution, which are not eliminated in bankruptcy.

Q: How will bankruptcy affect my life going forward?

Most find that the hit to their credit and financial effect from their debts has already happened prior to a bankruptcy filing. Most of our clients find that subsequent to a bankruptcy filing their credit score actually improves. It is not the end of your credit life. We recommend our client's get a credit card the instant a case is discharged—yes, it is absolutely possible and qualification to purchase a vehicle is also immediate for most upon discharge. However, the longer you can wait, the better. Usually, about one year after discharge and receipt of a new credit account for most people will result in a decent interest rate. By managing your finances and making timely payments on any new debts, you can quickly improve your credit rating. Most find that two years from discharge their credit has improved enough to qualify for a mortgage or obtain a vehicle at close to prime rates. Your bankruptcy will show up in background checks, but rarely affects your ability to obtain employment or housing. It is important to realize that the benefits of bankruptcy often outweigh these negative effects, and our law office can help you understand your best options for addressing overwhelming debts while meeting your family's needs.

Contact Our Office for More Information

If you have more specific questions about filing for bankruptcy in Texas, contact the office of Acker Warren P.C. to get the answers. Call 817-752-9033 for a free, no-obligation consultation with one of our skilled attorneys today.