Chapter 7 Bankruptcy in Texas

Interested in filing for Chapter 7 bankruptcy in Texas? Busby & Associates' bankruptcy lawyers in Houston can provide the experienced representation you need. The following outlines the process involved, including Chapter 7 bankruptcy requirements for filing with the court, and provides information on what is not considered dischargeable debts:

1. Credit Counseling

Before you file bankruptcy you must attend a briefing with an approved non-profit entity which will conduct a budget analysis with you. The cost for said counseling average $50. Please see our section on Credit Counseling for a list of providers.

2. File Petition, Schedules, and Statement of Financial Affairs With the Court

After all necessary information is collected, such as names and addresses of creditors, along with a summary of your monthly budget, a petition is drafted and prepared for filing with the Court.

When these documents are filed with the Court, you will be assigned a case number and this commences your case. Immediately upon filing your case, an injunction goes into effect stopping your creditors from taking any further action to collect or recover on any debt you owe. A paycheck garnishment or foreclosure is halted and a repossession may be reversed. This injunction is called the "automatic stay".

3. Mandatory meeting with the Trustee

This occurs about one month after your case is filed. It is often referred to as the section "341(a) Meeting." It is a very simple meeting usually and only lasts a few minutes for each case. Your attorney will explain what you can expect at the hearing and be present with you at this time. The Trustee is an independent person appointed automatically in all Chapter 7 cases by the United States Trustee's Office and will review your petition and confirm that the information you provided is true and correct.

Any unprotected assets, such as investment property or recreational vehicles, may be liquidated by the Trustee and then distributed to your creditors. The Trustee can also object to the granting of discharge in your case if he/she believes your case was not filed in good faith (such as you have too much excess income to file a Chapter 7) or if you have committed fraud in connection with your petition. Most assets are exempt, or protected from the Court up to a certain amount. In our office consultation, a review of your possessions will be made to insure that what you own will be protected.

4.Time for Objections By Creditors and Trustee

Your creditors have until 60 days after the date first set for your meeting with the Trustee to file a complaint objecting to the discharge of their debt, or to your entire discharge. Grounds for doing this include fraud (such as incurring charges on a credit card that you did not intend or have the reasonable ability to repay at the time they were made), false statements on a credit application, willful or malicious injury to a person or property of a person, and certain others.

In most cases no objections are filed. However, if a creditor does file a complaint, there will be a trial. You will need to decide whether you wish to defend the action, settle it, or just let it go to default judgment. Most objections received by our office are settled without further legal action or trial.

5. Discharge

The goal of your bankruptcy! If nobody objects to your discharge, then you will receive a Notice of Discharge in the mail about two months after your hearing. This notice basically provides that you are discharged from all dischargeable debts. Certain debts are not dischargeable, such as child support, alimony, certain taxes, student loans, and some others. It is important to also understand that the discharge applies to all dischargeable debts which you scheduled in your bankruptcy petition. If a creditor was not included, you may need to reopen your case, add the missing creditor and separately discharge that creditor. Additional fees and costs may apply so it is important that all creditors are properly identified at the beginning of your case.

In any event, the discharge will now allow you a "fresh start" to save some money and not worry about the threat of garnishments or repossessions. If you are like most clients, new credit will become available after a 12 to 18 month period after the bankruptcy. Many of our clients have qualified for a new car or refinancing their mortgage because most of their old "bad" credit is now gone.