Chapter 7 Bankruptcy Lawyers - Nick Davis Law

The primary difference between Chapter 7 and Chapter 13 Bankruptcy lies in how debts are addressed. Chapter 7, known as liquidation bankruptcy, involves the discharge of most unsecured debts without requiring repayment. It is typically completed within 3 to 6 months, making it a faster solution for those who qualify. On the other hand, Chapter 13 is a reorganization bankruptcy that establishes a court-approved repayment plan over 3 to 5 years, allowing individuals to pay back some or all of their debts based on their income and financial situation. Another key distinction is asset protection: Chapter 7 may involve selling non-exempt property, while Chapter 13 lets you keep all assets if you adhere to the repayment plan. Finally, eligibility for Chapter 7 depends on passing the Means Test, whereas Chapter 13 has debt limits for qualification.

Both Chapter 7 and Chapter 13 Bankruptcy offer ways to protect your home or car, but the approaches differ. Chapter 7 may require you to surrender non-exempt property, but Texas exemptions often protect essential assets like your primary residence and vehicle. If you’re current on your mortgage or car loan payments, you can typically keep those assets. Chapter 13 is particularly beneficial for those who are behind on payments, as it allows you to catch up through a structured repayment plan while halting foreclosure or repossession proceedings. The automatic stay in both types of bankruptcy temporarily prevents creditors from taking further action, giving you time to address overdue payments. Consulting with a dedicated bankruptcy attorney in The Woodlands or Houston can help determine the best option for protecting your assets.

While bankruptcy can eliminate many debts, certain obligations cannot be discharged under Chapter 7 or Chapter 13. These include child support, alimony, most student loans, and recent tax debts. Additionally, debts incurred through fraud, criminal restitution, and fines are generally non-dischargeable. However, Chapter 13 provides an opportunity to manage these debts through the repayment plan, potentially making them more manageable. For example, past-due child support or tax arrears can be paid off over the course of the plan. It’s crucial to review your specific debts with a trusted bankruptcy lawyer in Katy or College Station to understand which obligations can be addressed through bankruptcy and which will remain after your case concludes.

Filing for bankruptcy will initially have a negative impact on your credit score. Chapter 7 remains on your credit report for up to 10 years, while Chapter 13 stays for 7 years. However, bankruptcy can also be a turning point for rebuilding your financial future. Many people begin to improve their credit shortly after discharge by managing debts responsibly, paying bills on time, and using secured credit cards. Chapter 13 may have a slightly less severe credit impact since it involves repayment, which some lenders view as a responsible effort. Over time, the fresh start provided by bankruptcy can outweigh the temporary credit impact, especially when working with a dedicated bankruptcy attorney to avoid future financial pitfalls.

Yes, you can file for Chapter 7 again, but certain time restrictions apply. If you previously filed for Chapter 7, you must wait eight years from the date of your last filing to be eligible to file again. If you filed for Chapter 13 previously, you must wait six years to file for Chapter 7 unless specific conditions are met, such as paying off a certain portion of your debts in the Chapter 13 case. These timelines are designed to prevent abuse of the bankruptcy system while still allowing individuals a chance to seek relief when genuinely needed. Understanding these rules is critical, and a trusted bankruptcy lawyer in Houston can help determine your eligibility based on your filing history.

Co-signed loans are treated differently in Chapter 7 and Chapter 13 Bankruptcy. Under Chapter 7, the co-signer may still be held liable for the loan if you receive a discharge, as the creditor can pursue the co-signer for repayment. Chapter 13 offers better protection for co-signers through its repayment plan. If the loan is included in the repayment plan and payments are made according to the terms, the creditor typically cannot pursue the co-signer during the plan. For individuals in The Woodlands or Katy, it’s important to discuss co-signed debts with a dedicated bankruptcy attorney to explore the best way to protect co-signers while addressing your financial challenges.

Missing a payment under a Chapter 13 repayment plan can jeopardize your case, but options are available to resolve the issue. If you miss one or more payments, your trustee may file a motion to dismiss your case or convert it to Chapter 7. However, you can often negotiate with the trustee to modify the repayment plan or catch up on missed payments. Filing for a hardship discharge is another possibility, though it requires showing that circumstances beyond your control make repayment impossible. It’s essential to communicate with your bankruptcy attorney promptly if you face difficulties making payments, as acting quickly can help preserve your case and prevent negative consequences.