David A. Himes

Answers To Frequently Asked Questions About Bankruptcy

There are questions about bankruptcy that we hear from a number of clients, and then there are questions that pertain specifically to individuals’ unique situations. We address some frequently asked questions about bankruptcy here, with hopes that we may provide clarity on issues that you were wondering about.

For answers to questions regarding specifics of your situation, call David A. Himes & Associates, PLLC, at 936-310-2990 or schedule a consultation online.

How Do I Know Which Bankruptcy Is Right For Me?

This is a good time to remind you that not everyone has a choice between Chapter 7 and Chapter 13 of the Bankruptcy Code. In order to file for Chapter 7 bankruptcy in Texas, a debtor must qualify by meeting certain criteria, chief among them being that your household earns less than the state’s monthly median income. For a household of one in 2020, that amount is $4,241 per month. The amount increases as the size of the household increases.

You may still qualify for Chapter 7 if you exceed the household income limit and can show that you have little or no disposable income to pay your creditors. Those who qualify for both Chapter 7 and Chapter 13 bankruptcy usually opt for Chapter 7 because of the ability to discharge all unsecured debt.

A knowledgeable and experienced bankruptcy lawyer can review the specifics of your situation and recommend what is best for you.

Will All Unsecured Debts Be Forgiven In Chapter 7 Bankruptcy?

The short answer is no. But first, let’s define “unsecured debts.” This is credit that isn’t backed up by collateral. For example, you can discharge debt from things like credit cards, medical bills, car loans and bank loans. Chapter 7 bankruptcy will discharge the majority of your unsecured debts.

However, there is one common (and often large) type of unsecured debt that Chapter 7 bankruptcy cannot discharge: student loans. As a result, debt from student loans will follow you even after you declare bankruptcy.

In addition, there are some instances where your family will end up paying your student loans even after you die. Student loans are the most common kind of nondischargeable debt. But there are other kinds. For example, any debt you gathered through fraud or luxury purchases that you made right before declaring bankruptcy is generally nondischargeable. This helps prevent fraud.

How Much Of My Outstanding Debts Do I Have To Pay If I File For Chapter 13 Bankruptcy?

This is a question without a completely straightforward answer. Some people who file for Chapter 13 bankruptcy end up paying pennies on the dollar for their loans. In contrast, some people pay the full amount of their debt. This will all depend on the Chapter 13 bankruptcy plan that you or your lawyer submit to the court.

The big thing to remember here is that if you file for Chapter 13 bankruptcy, you must always pay at least the same amount as if you’d filed for Chapter 7 bankruptcy. The law does this to prevent people from trying to “game the system” with Chapter 13 bankruptcy.

However, there are still plenty of advantages to Chapter 13 bankruptcy. For example, if you make a solid payment plan and you stick to it, you’ll get to keep assets like your car or home after you pay them off.

Can I Talk With The Bank About Lowering My Interest Rate And Avoiding Foreclosure?

Absolutely. In fact, this should be your first recourse. If you cannot pay your debt because of an issue like sickness or unemployment, talk to your bank immediately. They may be amenable to changing your payment schedule to help you out.

In addition, there are federal regulations on lending to help prevent foreclosure. It’s important to remember that you cannot file for Chapter 7 bankruptcy to prevent foreclosure. This is because Chapter 7 bankruptcy discharges unsecured debt while foreclosure deals with secured debt.

Therefore, if you think that the bank may begin foreclosure on your home, it’s important to act as soon as possible.

Can I Get My Car Back After It Has Been Repossessed?

This is another question without a hard “yes” or “no.” Repossession is a pain. However, even if a lender repossesses your car, you may be able to get it back. For example, a lender needs to give you a reasonable amount of time to pay off the balance on your car loan before they can sell it. There is no set definition for how long a “reasonable amount of time” is for repossession. However, you can always talk to your lender before they sell the car to buy it back.

We Are Prepared To Answer Your Questions

We welcome the opportunity to address your questions and review the specifics of your situation. We emphasize clear communication and thorough explanations that inform our clients of all their options. We don’t follow cookie-cutter formulas. Instead, we create a strategy that is tailored to each client’s unique needs. Call 936-310-2990 or reach us online to schedule a consultation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.