Hi, my name is Mike. I’m an attorney here in Houston. I practice in the bankruptcy law section and I’m here to tell you today about some of the services that we can provide for through the Houston Lawyer Referral Service for bankruptcy.
Primarily there are going to be two chapters that you can file either a chapter 7, or a chapter 13. So, if you find yourself in a predicament where you are being called non-stop by debt collectors or you are at threat of either foreclosure or repossession of your vehicle or home, bankruptcy is an option that can help you resolve those problems.
So, chapter 7 is a short bankruptcy that typically lasts three or four months. It has a slightly higher filing fee of $338, but in a chapter 7 you’re basically getting rid of your unsecured debts. So, if you have say a credit card debt or some kind of personal loan that is in default and you’re being called daily by debt collectors or whoever it is that may be trying to collect the debt then you can file a chapter 7. Assuming that your income provides for the chapter 7 and if everything matches up, then in three or four months you can discharge that debt. And what happens is at the end of that you get an injunction meaning those debt collectors can no longer try to collect that debt from you.
The other thing that happens when you file a bankruptcy is, on the date that you file you get what’s called the automatic stay. That means that debt collectors cannot contact you from that point forward. So, as soon as you file that bankruptcy case those debt collectors have to stop contacting you. No more letters, no more calls, no more bugging you at home or work.
Now the difference between the 7 and the 13 is that the chapter 13 is a much longer one. It is used to cure secure debts. So, in a chapter 7 the cost can typically be around $2,000 to $2,500. And it’s typically paid upfront because it’s only a three or four month bankruptcy and then the debts discharged, but it doesn’t help you with your secured debts.
So, what happens if you’re behind on your home mortgage or you’re behind on your car? Well, that’s where chapter 13 can assist you. So, in a chapter 13 you’re going to have a plan and that plan basically says that you’re going to pay back to your creditors your disposable income after all your bills. So, when you file a chapter 13, say you’re three months behind on your mortgage or your car, you can then put that into the chapter 13 and cure the arrears.
Now chapter 13 is much longer and is more complicated than a chapter 7. A chapter 13 typically runs five years. So, it is a basic agreement, where for those five years you will pay back to your creditors that disposable income that you have and you will cure any arrears you have on your home and your car. But, assuming that you successfully do that, then at the end of those five years you get a discharge. Which means hopefully your home arrears are completely cured and you’re now fully current. Your car will be completely current and typically paid off because it’s paid off through the plan. And then you will have a discharge as to unsecured debt, so there’ll be no more unsecured debts out there. It is essentially a fresh start.
Both of these provide a fresh start, but the chapter 7 only gets rid of the unsecured debts up front, whereas the 13 gets rid of unsecured debts and lets you cure secured debts you’re behind on. So, these are both good options if you find yourself in default on loans that you simply don’t have the income to pay back.
Which chapter is best for you? That would be something that you need to discuss with the attorney that you talk to. There are also some in income requirements. If you have high disposable income you are most certainly going to end up in a chapter 13 of a repayment plan. But again, this is something that can help if you’re quite far behind on a home or a car or any kind of secure debt you need to catch up with your creditors.
So, if you have any further questions about this, feel free to reach out to the Houston Lawyer Referral Service and they will get you in contact with an excellent bankruptcy attorney to assist you.