The end goal of declaring bankruptcy is to protect assets from being claimed by creditors when one is unable to pay back what they owe. However, there are different approaches to it as laid out in the Chapters of Acts of Law that deal with bankruptcy.
Two of those laws are Chapter 7 and Chapter 13. The main difference between filing for bankruptcy under Chapter 7 and Chapter 13 bankruptcy is an applicant’s income level. Only those who have an income level that falls within a given bracket can file for Chapter 7 bankruptcy. It is often much simpler to file for Chapter 7 bankruptcy and it usually takes a shorter time. About 70% of people file for Chapter 7 bankruptcy compared to Chapter 13 bankruptcy applications.
Here is here how those who file under the two Chapters are treated in regard to specific debts.
-Car loans and mortgages are two debts that are treated very differently. A person filing under Chapter 7 will most likely have to give the asset back to the creditor or make arrangements to pay its wholesale value. Under Chapter 13, an applicant would most likely be allowed to keep the asset if they can keep to a payment schedule set by the court.
The new bankruptcy law establishes stricter criteria for filing Ch. 7 bankruptcy cases. A debt can typically be discharged in a Ch. 7 case if it is unsecured, means there is no property securing the debt.
Filing for bankruptcy is an important decision, and The Law Office of Donald E. Hood, PLLC wants to make sure that the type of bankruptcy protection that you choose is the right one for you.
You are entitled to keep a generous amount of your belongings when filing Ch. 7 bankruptcy. Texas law provides for high personal exemptions–items that are protected from seizure by your creditors.