Chapter 7 Bankruptcy Attorney

Paul Vigushin is a Plano lawyer who serves the Dallas, Plano, Addison, and Richardson areas.  He is a Chapter 7 bankruptcy attorney who helps guide clients through the difficult process of bankruptcy. Bankruptcy law can be complicated, so we've composed the following to help you better understand the bankruptcy process, or contact us at (972) 705-9911.

To file or not to file--that is the question.  Faced with a drop in income, divorce, an unexpected illness or mounting medical or legal bills, many people look to bankruptcy for relief.  Whether to declare bankruptcy is a very personal choice and the factors to consider differ from one individual to the next.  There are two primary types of bankruptcy protection available to individuals, commonly referred to as Chapter 7 and Chapter 13.  The Law Offices of Paul Vigushin, P.C. handles only consumer bankruptcies under Chapter 7 of the Bankruptcy Code.  The primary difference between Chapters 7 and 13 is this:  individuals who qualify for bankruptcy protection under Chapter 7 receive a complete discharge of their properly scheduled unsecured debt; while individuals who proceed under Chapter 13 repay a portion of their debt and receive a discharge for the remainder.  To find an attorney who handles bankruptcies under Chapter 13, call the Dallas Bar Association Lawyer Referral Services at (214) 220-7444.

Before You File

Before you file for bankruptcy protection, the first step is to determine if you qualify to file under Chapter 7 or Chapter 13 of the Bankruptcy Code.  Typically, this involves a two-step process.  The first step is to reference the State Median Family Income by Family Size data compiled by the United States Census Bureau.  This data is updated periodically.  If you make less than the median income for the size of your family, there is a good chance you qualify to file for bankruptcy under Chapter 7, provided you did not engage in any conduct which would give rise to an inference of abuse, which your attorney can explain in more detail to you at your initial meeting.  If you make more than the median income set out in the table, your attorney must then undertake a Means Test to determine your eligibility for filing under Chapter 7.  The Means Test is a fairly detailed undertaking which takes into account your income and certain allowable expenses.  It is possible, then, to still file for bankruptcy under Chapter 7 of the Bankruptcy Code if your income exceeds the Median Family Income, but the Means Test shows that there is no presumption of abuse.  Once again, your attorney can explain the Means Test to you in more detail.  At the very least, however, you will need to gather pay-stubs for each wage earner in your family going back six months and documentary proof of actual living expenses incurred, such as housing, transportation, insurance, etc.

If your attorney determines that you qualify for bankruptcy protection under Chapter 7, before you file, you (and your spouse, if you are filing a joint petition) will need to complete a credit counseling course and receive a certificate of completion.  Click on this link to find a list of approved Credit Counseling Agencies in the State of Texas.  You have 180 days from the day you complete your credit counseling course to file for bankruptcy.  If you wait more than 180 days, you will need to retake the credit counseling course before you file for bankruptcy protection.

After You File

Your attorney will prepare the bankruptcy petition and schedules.  The petition and schedules are what is filed with the bankruptcy clerk in order to start the bankruptcy process.  Once the bankruptcy petition is filed, an automatic stay goes into effect, which prevents creditors from contacting you concerning the debt.  In theory, the automatic stay goes into effect the moment you file for bankruptcy protection.  In practice, it may take several days for creditors to receive notice of the bankruptcy filing.  If you receive calls from creditors, notify them of the bankruptcy filing and provide them with your bankruptcy case number.

When you file for bankruptcy protection, a trustee is appointed to oversee your case and to preside at the creditors’ meeting (commonly referred to as a 341 Meeting).  The trustee is typically an accountant or attorney who is in private practice.  The trustee’s job is to review the petition and schedules to see if the bankruptcy filer has any assets which can be used to pay creditors.  Most bankruptcy estates are “no asset” estates, which means that, after property is exempted under either state or federal law, there are no assets with which to pay creditors.  However, occasionally, a Chapter 7 bankruptcy filer will have assets that are not exempt, such as a third vehicle, when there are only two licensed drivers in the household, or money in the bank.  In that case, the non-exempt assets are turned over to the trustee for distribution to those creditors who file timely proofs of claim.  Depending on the district in which your bankruptcy case is filed, you will know the identity of the trustee assigned to your case and the date of the 341 Meeting on the day you file or shortly thereafter.

After you file for bankruptcy, you will need to complete a financial management course.  The same Agency which provided you with the pre-filing consumer counseling course also provides the post-filing financial management course.  

341 Meeting

The purpose of the 341 Meeting is for creditors to question you concerning your assets and liabilities and the general circumstances surrounding your bankruptcy filing.  As a practical matter, very few creditors attend these meetings, but some send representatives.  The trustee presides over the 341 Meeting.  At the meeting, your attorney asks you questions about your petitions, schedules and the reason for the filing bankruptcy.  The trustee may also ask you questions about any assets and/or liabilities that you listed in your bankruptcy schedules.  

Discharge

Shortly after the 341 Meeting, the trustee files a no-distribution report (assuming that your bankruptcy estate does not have any non-exempt assets to distribute to creditors).  All creditors are given a deadline by which to object to the discharge.  If no objections are received, the bankruptcy judge enters a Discharge Order, which discharges all properly scheduled debt.  A discharge means you get a fresh start.  The bankruptcy filing stays on your credit report for ten years.  You must also wait seven years from the date you initially filed to file another bankruptcy (assuming you receive a discharge after your initial filing).  If you have debt secured by an asset—such as a car or a house—you can reaffirm that debt (and continue paying it after the bankruptcy discharge in return for keeping the asset), surrender the asset and discharge the debt, or redeem the asset at its fair market value.  To take advantage of the latter option, you will have to make a lump sum payment to the creditor.  For instance, if you owe $10,000 on your car, but it is only worth $6,000, you have the option of redeeming the vehicle for $6,000 (and discharging the remaining $4,000), but you must pay the creditor the entire $6,000.  There is no option in a Chapter 7 to force a secured creditor to either reduce the interest rate or to accept installment payments on a reduced amount owed.

Windfall

If you (or your spouse, if you have a joint filing) come into an inheritance, win the lottery or receive life insurance proceeds or any other “windfall”  within 180-days of the day you filed your petition for Chapter 7 bankruptcy protection, you must immediately notify both your attorney and the trustee.  This “windfall” may not be yours to keep.  In fact, it becomes property of the bankruptcy estate the minute you become eligible to receive it.  For instance if, within 180-days of when you filed for bankruptcy (even if your case has already been discharged), you receive money as a beneficiary under a life insurance policy, that money belongs to the bankruptcy estate.  Even if you attempt to disclaim this money under state law (under the Texas Probate Code, for instance), that disclaimer is not effective.  The only way you would be entitled to keep the “windfall” is if the trustee abandoned the money or assets.  In all likelihood, once notified of the “windfall,” the trustee would move to reopen your bankruptcy case (if the case is closed), collect the “windfall” proceeds, notify all listed creditors to file proofs of claim and distribute the money to those creditors.  Although you should consult with your attorney, one option you may consider upon receipt of a “windfall,” and if your case is reopened, is to move to dismiss your bankruptcy case, so that you can pay your creditors outside of bankruptcy and not be charged with the filing.  Dismissal of a voluntary Chapter 7 bankruptcy case is entirely within the discretion of the Bankruptcy Court Judge.

We serve: Dallas, Plano, Frisco, Richardson, Allen, Mesquite, Garland, Ft. Worth, Sherman, Waco, Waxahachie, Desoto, Rockwall, Hurst, McKinney, Dallas County, Collin County, Rockwall County, Denton County, Tarrant County, Johnson County, Ellis County, Parker County, Navarro County, Kaufman County, Hunt County, Grayson County, Wise County, Hood County, Somervell County, Hill County, McLennan County, Limestone County.