In Texas, bankruptcy chapters define all requirements for consumers. The chapter they select determines what provisions and restrictions are enforced. However, all consumers are required to complete credit counseling programs before their claim starts. A bankruptcy lawyer in McKinney, TX explains all steps involved according to the chapter selected.
The General Requirements for Bankruptcy
For chapter 13, the consumer qualifies according to the median income for their household size. The median income for McKinney is $82,988. The consumer’s income must exceed the median income to qualify. All income statements for the last six months are reviewed to establish the consumer’s annual income.
For chapter 7, the consumer owns enough assets to generate proceeds to pay off their debts. As a general rule of thumb, the value of the consumer’s assets exceeds the total cost of their debt. However, consumers who are hoping to pay off only a portion of their debt won’t need extensive assets to accomplish their goal. The court reviews all assets and determines their value.
What Processes Are Followed During Bankruptcy
In chapter 13, the consumer follows a repayment plan created by their attorney. The plan requires them to make monthly payments until the end of the claim. The cases last up to five years. All disposable income is restricted to paying off any additional debts that weren’t included in the claim. In some cases, the court garnishes the consumer’s wages.
In chapter 7, the court appoints a trustee who manages the sale of all assets seized for liquidation. The trustee submits all payments to the creditors after each asset sales. The entire process won’t last any longer than six months. Once the claim starts, the consumer has the right to accumulate more assets and control their finances.
In Texas, bankruptcy chapters determine if the consumer is liquidating their assets or starting a new plan to settle the debt. The consumer completes an eligibility process to determine what chapter is available to them. The chosen chapter is completed according to all state and federal bankruptcy laws. Consumers who want to learn more about bankruptcy can contact a bankruptcy lawyer in McKinney, TX at the Law Firm of David S. Kohm now.