Practice Areas
Chapter 7 Overview
Fort Worth Chapter 7 Bankruptcy
The Vida Law Firm, PLLC represents individuals and small businesses throughout the Ft. Worth, Texas area who are facing extreme debts and need assistance with Chapter 7 bankruptcies, which are the most common bankruptcies filed in the United States. The most common reasons for an individual to need a Chapter 7 are credit card debt and medical debt. Other common types of debt in Chapter 7 cases are pay day loans, signature loans, repossessed vehicles, apartment leases, phone bills, and co-signed car loans. It is also very common for an individual to have personal liability on business debt such as leases, business loans, equipment, vehicles, and credit cards. A person with overwhelming unsecured debt needs legal relief from the personal liability associated with the debt, and is looking for a “fresh start.”
Discharging debt in a Chapter 7 bankruptcy means that you are not legally responsible for the debt anymore. A Chapter 7 bankruptcy discharges most unsecured debt such as credit card bills, medical bills, and loans not backed by collateral, allowing you to obtain a fresh start. You do not pay income taxes on debt that is discharged in bankruptcy. However, Chapter 7 bankruptcy in Fort Worth will only discharge debts you incurred before filing.
Secured debts are debts that are secured by collateral. For most people, that means your house and car. If you want to keep those assets in a Chapter 7, you may do so as long as you continue to make the monthly payments according to the contract. Chapter 7 does not change the terms of your home and car loans. You are also allowed to let the asset go back the the creditor if you do not want to keep it and pay for it. If you are behind on your house or car payments, please talk to one of our attorneys about your options.
Filing a bankruptcy does not mean that you leave a bankruptcy naked and penniless. Many people fear filing for Fort Worth Chapter 7 because they believe they will have to sell their home, car, or other property. That is not correct. You are allowed to “exempt” certain property, meaning that you are protecting your right to keep the property from the reach of the creditors.
While it is true that you might have to sell some “non-exempt” property, a range of property is exempt in Texas. Exempt property generally includes most daily necessities, household items, benefits under most insurance policies, items you need for your trade or profession, your homestead, your vehicle, and your retirement accounts.
The topic of what property is and is not exempt is very particular to your individual situation, and it is particular to Fort Worth, Texas. Receiving detailed legal advice about protecting your property is very important to your peace of mind. At the Vida Law Firm, PLLC, we draw on our extensive knowledge of all applicable state and federal laws to help you retain as much property as possible. Behrooz and Carla Vida have a combined legal experience of over 70 years. Making sure that you have your questions answered is one of our highest priorities.
Several types of unsecured debts cannot be discharged in a Chapter 7 in Fort Worth. These include but are not limited to:
- Child support
- Spousal maintenance (alimony)
- Student loans
- Some tax debts
- Fines, penalties, or restitution owed to the federal government
Additionally, debts that you did not include in your filing paperwork cannot be discharged; therefore, being forthright about all of your debts, and researching to find old debt are in your best interest. Getting a copy of your credit report may help to refresh your memory about debts you may have forgotten or debts that were sold to other creditors. You may get one free credit report per year at: https://www.annualcreditreport.com/index.action
At The Vida Law Firm, we have extensive experience is handling IRS debt. Whether or not you will be able to discharge part or all of your IRS debt depends on how old it is, whether you filed a return, whether you filed your return on time, and whether the IRS has filed a lien. To help us answer your questions about your IRS debt, please obtain a copy of your tax account transcript for the year in question at: https://www.irs.gov/individuals/get-transcript
If your debts are largely made up of non-dischargeable debts, particularly IRS debt, a Chapter 13 bankruptcy may be more appropriate option to pursue; an experienced attorney can advise you on your options and help you determine what is best for your particular situation.
Businesses that are corporate entities may also file Chapter 7 bankruptcy. Upon filing a Chapter 7 bankruptcy, a corporation must cease operating. The Trustee of the bankruptcy is responsible for selling the assets of the business and using the proceeds of that liquidation to pay creditors. In some circumstances, the Trustee may choose to continue operating the business during bankruptcy proceedings. Some businesses simply cease operating and close without the necessity of filing a bankruptcy.
Business owners have usually guaranteed many common business debts, such as leases, bank loans, equipment and vehicle loans, and vendor debts. A Chapter 7 for the business does not relieve the guarantor of the liability for the debt, so it is important to seek specific legal advice regarding which parties may be liable for debt from a business that is closing.
Behrooz Vida is certified by the Texas Board of Legal Specialization in business bankruptcy law.
FAQs
Fort Worth Chapter 11 Bankruptcy
Chapter 11 is a restructuring process that allows a business to keep operating while it works out a court-approved plan to manage and repay its debts.
Yes. In most cases, the company continues normal operations, and current management remains in control unless the court decides a trustee is necessary.
It’s a detailed proposal outlining how the business will adjust its debts, such as changing payment terms, reducing certain obligations, or selling assets, to regain financial stability.
The timeline varies. Some cases can wrap up within several months, while more complex reorganizations may take a year or longer to finalize.
FAQs
Fort Worth Chapter 13 Bankruptcy
You probably qualify for Chapter 13 relief if your unsecured debts are less than $336,900 and your secured debts are less than $1,010,650. These statutory limits change periodically, and it may be a good idea to consult with an experienced bankruptcy attorney regarding your eligibility; if your debts exceed these limits, you may wish to file a Chapter 11 reorganization bankruptcy instead.
While each case is unique, you can usually keep your house even if you file under Chapter 13. Filing a bankruptcy petition ceases foreclosure proceedings, and through the repayment plan, we can help you reach a more manageable payment schedule for your mortgage payments. To be able to keep your house, however, you must make these payments on time.
The fact that you have declared bankruptcy will remain on your credit report for seven years. While this will not necessarily prevent you from being able to obtain new credit, potential creditors will take it into consideration. Additionally, while you are in Chapter 13, you must obtain approval from the court before you incur new debt.
Chapter 13 can be an effective solution for people with significant income tax debt. In fact, debts meeting the following criteria will be discharged:
- The debt must be from a tax return whose due date was at least three years before the bankruptcy filing
- You must have filed the tax return at least two years before the bankruptcy filing
- The taxes were not assessed within the 240 days before the filing
- You are not guilty of tax evasion and have not committed any fraud or misrepresentation
Instead of being discharged, debts that fail to meet these criteria become priority taxes, and will be included in your repayment plan. These rules governing the tax implications of declaring Chapter 13 can be complex and intimidating, and an experienced bankruptcy attorney can advise you on your rights, obligations, and any other exemptions that may apply.
Every Chapter 13 repayment plan is unique and custom-tailored to the debtor’s specific circumstances. While declaring bankruptcy will temporarily stop collections activity, whether or not you can keep your credit cards will depend upon the nature of your repayment plan; our attorneys will negotiate to help you obtain the best possible arrangement with your creditors.
To learn more about Chapter 13 bankruptcy, contact The Vida Law Firm, PLLC today.
FAQs
Personal Bankruptcy In Fort Worth
Filing a personal bankruptcy means that you are seeking the assistance of existing bankruptcy law to manage your debt obligations. Debt is categorized generally in groups of secured and unsecured debt. Secured debts are things like house loans and car loans. Unsecured debts are things like credit card debt, medical debt, and signature loans. Bankruptcy law is a tool to assist you, and it prioritizes secured debts over unsecured debts. It is a big decision for you, so you will want to get experienced guidance on how it applies to your personal situation.
At The Vida Law Firm, LLPC, both Richard Venable and Behrooz Vida, are board certified consumer bankruptcy specialists. In addition, Behrooz Vida, is board certified in business bankruptcy. For an attorney to become certified as a specialist by the Texas Board of Legal Specialization, the attorney must have:
- Been licensed to practice law for at least 5 years.
- Practiced bankruptcy law for at least 3 years.
- Devoted a minimum of 30% of their law practice to bankruptcy law.
- Handled a wide variety of specific bankruptcy law matters to demonstrate experience and involvement.
- Regularly attend bankruptcy law continuing legal education seminars to keep their legal training up to date.
- Been evaluated by fellow lawyers and judges.
- Passed a day-long written examination.
Of the approximately 61,000 licensed attorneys in Texas, only 158 are board certified in consumer bankruptcy law.
Bankruptcy is a field of law devoted to assisting people and businesses deal with their creditors. Immediately upon filing a bankruptcy case, creditors are stopped or enjoined from taking any further steps toward collecting payments. This injunction, or the automatic stay is one of the primary benefits of filing a bankruptcy. The bankruptcy judge may impose sanctions or penalties against creditors who attempt collection after the bankruptcy case has been filed. Most creditors are aware of this and immediately stop collection when they are notified that you have filed a bankruptcy.
Generally, there are three types of bankruptcy that may be available to you, and the laws pertaining to the types of bankruptcy are contained in various chapters of the United States Bankruptcy Code. The most common types of bankruptcy are Chapter 7, Chapter 11, and Chapter 13.
It is important to know what bankruptcy is NOT. It is not a procedure for avoiding debts you simply don’t want to pay, but can otherwise afford to pay. It is not a procedure that allows you to keep your house and cars without paying for them.
The Bankruptcy Code specifically prohibits employers from discriminating against employees who file bankruptcy. This prohibition applies to both private and governmental employers.
An employer is notified of your bankruptcy only if you owe money to your employer.
The property which you can keep out of the reach of most of your creditors is known as exempt property. “Most debtors do not lose assets when filing a bankruptcy. One list is provided for by the United States Bankruptcy Code, and the other is provided by Texas Laws and other Federal Laws. Both lists are designed to allow you to keep your house, cars, and household goods.
There are certain advantages and disadvantages to each list, and your attorney will advise you as to which list is best for you. It is extremely rare that you have to give up any assets when filing a bankruptcy. If you exceed the exemption limits, your attorney will advise you of your options.
Understanding what exempt property is, and what you can keep is certainly important, but somewhat confusing to the lay person. You should rely on your attorney to fully explain this area of bankruptcy law.
Remember, if you still owe the creditors having liens on your home and cars, you will have to pay for them if you want to keep them despite these items being exempt assets.
Your spouse does not have to file a bankruptcy with you. This is common when spouses do not have much joint debt. Texas is a community property state, so you will need to get specific advice about the potential impact on your spouse and the necessary disclosures that you will have to make. If your spouse is jointly liable on a debt, your bankruptcy does not eliminate your spouse’s liability.
First of all, your filing a bankruptcy will not be listed on an ex-spouse’s credit report. Debts that you incurred after the divorce that are not co-signed or guaranteed by your ex-spouse will be discharged and the ex-spouse will not be affected.
If you incur debts during a marriage, get a divorce and then file a bankruptcy, you may be discharged from the debts and the creditor may no longer look to you for payment. However, the creditor may look to your ex-spouse for payment and your ex-spouse may have remedies against you despite your bankruptcy.
This area of the bankruptcy law is very complicated, we strongly recommend that you seek advice tailored to the facts of your situation.
There is no debtors’ prison in the United States, and your inability to pay your debts is simply not a basis for criminal prosecution.
When you file a bankruptcy, a notation is made on your credit report. The report states that your debts were “discharged in bankruptcy”. In a sense, this is part of your fresh start in that “slow pay/no pay” entries will no longer be re-entered on your report.
The bankruptcy notation remains on your credit report for 10 years.
If you continue to make your house and car payments, you will continue to have good credit with those creditors.
Filing a bankruptcy is a negative entry on your credit report. Whether or not you can get new credit following a bankruptcy depends on several factors. The main factor will be your level of income. The higher your income, the more likely you are to obtain credit. Also important is the length of time since the filing of your bankruptcy. As a general rule it is difficult to get new credit within two years of filing a bankruptcy. Thereafter, the degree of difficulty drops off significantly. Also, you may maintain good credit standing with those creditors to whom you continue to make your required payments, such as your car and house creditors and those creditors to whom you did not owe any money on the date of filing your bankruptcy.
Do you know how long it takes to pay off $1,000.00 in credit card debt if you just pay the minimum? How about $5,000.00 or $10,000.00? According to a bank study, if the credit card interest is only 17%, it will take you 12 years to pay off $1,000.00! It will take you more than 24 years to pay off $5,000.00 and 29 years to pay off $10,000.00! That’s assuming you’re not late on any payments and your annual percentage rate is 17%.
If your credit card debt is so large that you are only able to make the minimum payments, and are unable to properly maintain your household, bankruptcy may be the answer to your problem.
You are required to list all of your existing credit card debts in your bankruptcy, but you do not have to list the credit cards that have no balances.
No matter which chapter you file, you should not make any payments exceeding $600.00 to any credit card company within 90 days of your bankruptcy without discussing this with your attorney.
As a general rule, no.
Your meeting with the Bankruptcy Trustee will be conducted by Zoom, so you do not have to drive downtown. It is very efficient, and the clients love it.
It is relatively rare that a debtor actually has to go to court and testify in a bankruptcy case.
Student loans are not discharged in a bankruptcy unless repayment would cause “undue hardship” on you and your dependents.
Rarely, will a bankruptcy court rule that repayment of a student loan will cause “undue hardship.”
We recommend that you discuss the facts of your case with your attorney to determine whether you qualify to discharge your student loan.
No. The bankruptcy code requires you to disclose and list all of the debts that you have on the date you file your case.
FAQs
Business Bankruptcy In Fort Worth
A business bankruptcy filing is more specialized than a consumer one. In most cases, a business in need of relief to reorganize its finances can file for a Chapter 11 bankruptcy in Fort Worth. Chapter 11 bankruptcy can assist your company through a reorganization process while you continue to operate the business. For businesses that need to close, a Chapter 7 liquidation is a better option. Sometimes, the business does not need to file at all, but the business owner does. Individual business owners are typically required to personally guarantee business bank and internet loans, leases, and credit cards, which can create a crisis for owners.
Yes. In a sole proprietorship, you essentially are your business, so you are personally responsible for any debts the business incurs. However, whether your case would be filed as a “consumer bankruptcy” or a “business bankruptcy” depends on the specific nature of your debts. It is often possible to keep personal loans (such as a mortgage) while reorganizing or discharging your business’s loans; it may even be possible for you to continue owning and operating your business. During your initial consultation, we will carefully examine your financial situation, discuss the available options, and create a plan that will work best for you.
Although changes to the Bankruptcy Code passed in 2005 affected bankruptcies based on tax debts, you still have options. Small businesses commonly fall behind on paying self-employment and other taxes to the IRS, as well as state and local taxes. Some taxes, such as personal income taxes, may be dischargeable under bankruptcy if you meet certain conditions. However, the tax implications depend entirely on your circumstances. Contact The Vida Law Firm, PLLC today to schedule a consultation so that we can meet with you, go over your tax history, and explore the options that are available to you.
The future of your business depends entirely on your business’s financial situation and the nature of the debts you have incurred. It also depends on whether you are filing a personal case or whether your business entity is filing a case.
If you are filing a personal bankruptcy, your business entity is an asset in your bankruptcy. Whether or not your business is protected in your bankruptcy depends on the value of the business. Seek specific legal advice on this issue.
If the business entity is closing down and liquidating its assets, it will file a Chapter 7.
If the business has the resources to reorganize, it can file a Chapter 11 and continue to operate while it restructures debt.
While bankruptcy can seem scary and intimidating, it can be a useful tool for helping a business through a financially difficult time. Our attorneys are dedicated to helping you through each step of this process; if your goal is to maintain control over your business, we will do everything we can to make that happen. To learn more about how we can help with your business’ financial issues, contact The Vida Law Firm, PLLC today.
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