Houston Bankruptcy Law: Types of Bankruptcy
Being bankrupt is a hard thing to accept and many people are having a difficult time in dealing with this kind of problem. The smarter ones choose to file for bankruptcy, which is a way for them to start a new life. Whether you’re from Morgan’s Point and would need to declare Morgan’s Point bankruptcy, it is essential that you know your options so you can discuss this with your Houston bankruptcy lawyer.
Types of Bankruptcy
There are about five important bankruptcy types that you need to be aware of. The first two chapters on the list are for personal cases while the others are for businesses.
- Chapter 7. If you want to live a new, debt-free life, chapter 7 is the way to do it. This is an option wherein you liquidate your assets for cancellation of debts, which is called a “discharge.” However, you must be willing to give your non-exempted properties to pay for your pending debts. As for the exempted properties, make sure you ask your lawyer regarding this so that you’ll know if you can keep certain assets such as your house or your car.
- Chapter 13. Also called as the “wage earner plan,” this is a type of bankruptcy law that will let you keep your assets with a promise that you can pay for all your debts within the agreed terms. More often than not, this is done every month and is usually deducted from your monthly earnings. Being debt-free will take years to achieve but you get to keep your house and other valuable possessions.
- Chapter 9. This is created specifically for municipalities and town halls.
- Chapter 12. This law is similar to chapter 13 but for family farmers.
- Chapter 11. This is a repayment plan that is sometimes used by big companies.
Reasons for Filing
For those individuals who aren’t bankrupt, here’s a warning—make sure that you avoid the following things so that you will never be put in a situation wherein you need to file for bankruptcy.
- Spending more than you can afford. The first important thing that you can do to avoid this situation is to budget your money wisely. Don’t spend beyond your means. Make sure that you always save at least ten percent of your monthly earnings for emergencies. Always pay for what you need first like your bills and not what you want.
- Long-term illnesses. Getting sick is unavoidable but preparing for it can be done. Getting health insurance can help you save a lot of money if this unfortunate event happens. Also, don’t forget to save as much money as you can too.
- Death of a family. If you suddenly die, what will happen to your family? Acquire life insurance so that they will be cared for financially even when you’re gone.
- Drugs and alcohol. Being addicted to drugs and/or alcohol can be very expensive and those who have this problem would usually do anything and everything to pay for their vices. They would even steal if they don’t have enough money to pay for their drugs. Steer away from this path. It will kill you financially and literally.
Please visit our website for more information about us and bankruptcy.
Call us today at (713) 974-1151 to schedule a no-obligation consultation or feel free to email us at Consumerlaw@busby-lee.com.