Bankruptcy is a legal process allowing an individual or business to have some or all of their debt absolved. It is almost always considered as a last resort because it can have some negative long-term consequences which must be considered, even if you eventually decide that they are outweighed by the benefits. Bankruptcy is a formation of federal law, and goes through federal courts. Therefore, the process governing bankruptcy in Texas will be roughly the same as it is everywhere else in the U.S. But individual courts have different rules for what property is exempt, so you should consult a local Corsicana, Texas before you file.
Chapter 7 Bankruptcy in Corsicana, Texas
There are 2 main forms of bankruptcy in Corsicana, Texas. They are known as Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 involves liquidation of part of a debtor's assets. It requires that a certain percentage of the debtor's property to be sold to pay off as much debt as possible. The majority of property that most people own, however, is exempt. This normally includes homes, vehicles, retirement accounts, and others. These are not available to creditors.
Once the non-exempt property is sold, the rest of the dischargeable debt is cleared. Some forms of debt, however, is non-dischargeable, including student loans, criminal fines, and others. If most of your debt in Corsicana, Texas is not dischargeable, Chapter 7 may not be the best option.
Chapter 13 Bankruptcy in Corsicana, Texas
Chapter 13 Bankruptcy in Corsicana, Texas is very different from Chapter 7. Whether or not it is a better option is very dependent on the facts of each particular case. Chapter 13 bankruptcy does not discharge debt. Instead, it restructures it. This involves the bankruptcy court coming up with a new payment plan that supersedes the terms of the contracts that gave rise to the debt in the first place. This results in an altered payment plan that the debtor should find manageable, if he or she can make a few sacrifices.
Which Type of Consumer Bankruptcy Should I File in Corsicana, Texas
Chapter 13 is normally a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
In any case, you should talk with a local Corsicana, Texas bankruptcy lawyer. Your lawyer can advise you of your options and inform you of their likely outcome. This will make it much easier for your to make an informed choice.