This FAQ asks questions likely on your mind when preparing for bankruptcy. Simply put, read these answers and get a better understanding of bankruptcy law.
What if you face foreclosure?
If you face foreclosure, you need to take immediate action. Texas home owners have options, as the homestead exemption is highly effective in protecting your home. But if you wait too long, you may lose the home. If you file early enough, you can make your home either part of your Chapter 13 bankruptcy or be able to afford paying it outside your Chapter 7 filing by discharging debt.
What if you have a job?
Filing bankruptcy rarely has much affect on your job situation, if only saving the money you make from being taken by creditors. If you file Chapter 7 bankruptcy, your money and assets can be part of the discharge, but in most cases filers lose nothing. When filing Chapter 13 bankruptcy, you need some source of income in order to fund the payment plans, so having a job is a big help.
What if you have no income?
In filing Chapter 7, if you make too much money, you may not be eligible. But obviously if you have no job – even if you are on limited disability of some kind – you are almost always eligible. In fact, making little to no money is an advantage in Chapter 7 bankruptcy. It does not work as well with Chapter 13. So if you have a job and a lot of assets you want to protect, Chapter 13 is better. If you make less money and have a lot of debts, Chapter 7 can be better.
What if you owe more than you can possibly pay?
The general rule here is if within several years time – say 3-5 years – you have no way of paying off your debts, it’s time to consider bankruptcy. And by bankruptcy, we are focused on Chapter 7. If you have a home, on the other hand, and have some income coming in, you may consider paying back your debts with Chapter 13 so you can keep your home and other assets.
What if you’re lawyer is bad?
The last “what if” is a common problem heard within bankruptcy circles. You hired the wrong lawyer. There is no legal obligation to keep him or her on your case. You have to pay up to the point they stopped working for you. If a lawyer is either taking no action to file your case, and charging you money for it, or is making some simple mistakes, there is no rule you can’t fire him or her. Move on, hire a more experienced, effective lawyer, and get a fresh start.
