The recent recession has been traumatic on the pocketbooks of the average American. Now, with the increase in pressure to spend money on gifts for the holiday season approaching, individuals in Texas and elsewhere may become even more worried about their finances. Those who are already overburdened by debt may want to consider taking action to lift this burden. One possible solution would be to file a personal bankruptcy to obtain debt relief.
Individuals looking to petition for bankruptcy usually choose between two different types of bankruptcies. These two options are known as Chapter 7 and Chapter 13 bankruptcies, each with its own advantages and disadvantages. Chapter 7 is the most common type of bankruptcy and is also known as a 'liquidation,' since the petitioner is required to liquidate all assets that are not exempt in order to repay creditors. Much of the remaining debt can be discharged.
In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act created the 'means test' for Chapter 7 bankruptcies. This test made certain individuals who earn more than a set amount of money ineligible for debt relief through Chapter 7 bankruptcy. The new law was designed to encourage more people to file for Chapter 13 petitions, which would require them to repay a portion of the debts within five years. A Chapter 13 bankruptcy reorganizes debts into more manageable payments through a payment plan.
Deciding to file for personal bankruptcy is a significant decision and should be deliberated thoroughly before making a final choice. However, if one decides that bankruptcy is the right decision, the petitioner will have to ensure that required paperwork is properly filled out and processed. In Texas, even a small mistake in the bankruptcy documents can cause the court to dismiss the petition. It may be necessary to obtain the advice of an attorney knowledgeable in bankruptcy law to ensure success.
Source: Windy City Times