Houston bankruptcy lawyer provides answers to Chapter 7, 11 & 13 Bankruptcy Frequently Asked Questions
When individuals are unable to pay their bills, they can file for bankruptcy to immediately stop all creditors from trying to collect on their debts. Bankruptcy also provides a process in which a federal bankruptcy court eliminates or determines the process by which debt will be repaid. Bankruptcy could also stop foreclosure on your home, prevent dispossession of property, or halt wage garnishment.
What kinds of bankruptcy are available for consumers?
There are four basic types of bankruptcy available under federal law.
Chapter 7: a debtor gives up property which exceeds certain limits or exemptions to allow the property to be sold to pay creditors
Chapter 11: used by businesses and individual debtors who have large debts
Chapter 12: limited to family farmers or family fisherman
Chapter 13: a debtor files a plan with the court to pay debts (or part of debts) from existing income
Consumers typically file either Chapter 7 or Chapter 13 bankruptcy.
What is Chapter 7 bankruptcy?
Under Chapter 7 bankruptcy, a debtor files a petition with the bankruptcy court. The debtor must then sell certain non-exempt property to satisfy debts owed to creditors. Property owned by a debtor will often be considered exempt. A bankruptcy lawyer can be very helpful in ensuring that a debtor petition is filed properly, and that the debtor understands which property has exempt status.
What is Chapter 13 bankruptcy?
Under Chapter 13 bankruptcy, debtors file a plan with the bankruptcy court indicating how they plan to pay off their debts over the next three to five years. A bankruptcy lawyer can assist a debtor in determining which debts must be paid in full or in part.
What is Houston Chapter 11 bankruptcy?
Under Chapter 11 bankruptcy in Houston, a debtor (a corporation, sole proprietorship, or partnership) proposes a plan of financial reorganization to keep its business viable and pay creditors over an extended period of time. Selling off the assets of the business to pay debts or monetary relief are available options, but these may not be enough to cover all of the indebtedness.
How should I file for Chapter 11 bankruptcy?
For best results, begin by engaging a qualified Chapter 11 bankruptcy lawyer in Houston. Your attorney will help ensure that Chapter 11 is the right choice for you before beginning the process.
The process begins with filing a petition in the U.S. District & Bankruptcy Courts for the Southern District of Texas in Houston. The petition can be filed by either the debtor or by the debtor’s creditors. In addition, the debtor also has to file a number of schedules to show current financial position.
The bankruptcy court appoints a U.S. trustee—an individual or an institution such as a bank—who appoints one or more committees to represent creditors and any stockholders. Together, these committees work with the debtor company to reorganize for debt relief. They develop a plan for the bankruptcy court’s approval.
The court authenticates the plan or can decide to reject it. Even if creditors vote to disallow the plan, the court can choose to ignore the vote.
While filing Chapter 11 bankruptcy results in reorganization, it can also result in liquidation and the monies gained through the sale of the company’s assets reimburse the company’s creditors.