The difference between a
Chapter 7 and Chapter 13 bankruptcy is an important distinction to be aware of when
looking to file bankruptcy. The main difference between these two bankruptcies
is the repayment of your debts. A chapter 7 bankruptcy consists of discharging
debts because of an inability to pay them. In order to qualify for this type of
bankruptcy there is a means test. This test will determine a "disposable income"
which is found after considering your income and expenses for a period
of six months. The amount of income left over after deducting expenses
is your disposable income and that number goes into determining if you
will be able to pay back your debts after filing for bankruptcy.
If you do not pass the means test then you may be eligible for a
Chapter 13 bankruptcy. This type of bankruptcy requires the repayment of debts while
on a 3-5 year plan. In order to qualify for a Chapter 13 bankruptcy you
need to have a regular income, you will have to take a credit counseling
course, you cannot have over $336,000 in unsecured debt between you and
your spouse, you cannot have over $1,010,650 in secured debt between you
and your spouse and you cannot have a prior bankruptcy dismissed within
180 days of filing for this bankruptcy.
A Chapter 7 bankruptcy is meant for individuals who truly cannot pay back
their debts but even if you qualify for this bankruptcy it is not certain
that it is in your best interest. The bankruptcy process is complex so
contact an experienced Houston bankruptcy attorney from our firm to discuss
your unique situation!