Bankruptcy Services in Killeen & Waco

Who Can File for Bankruptcy in Texas?

Both individuals and businesses can file for bankruptcy in Texas. To file, you must either live or have principal assets in the Western District of Texas for at least 90 days. Because her office and the courts now largely operate virtually due to the COVID-19 pandemic, Erin is prepared to assist clients throughout the state. 

Types of Bankruptcy in Texas

Before you file for bankruptcy, it can be helpful to understand all of the available options. After evaluating your financial circumstances, Erin will determine your eligibility for each bankruptcy type. 
The firm’s bankruptcy services in Killeen & Waco include assistance with:

• Chapter 7 Bankruptcy. This is the most favored type of bankruptcy because you are discharged from your debts in about three months and your wages and income tax returns are not garnished.  The vast majority of the bankruptcy cases that Erin files are Chapter 7 bankruptcies.  Due to  generous exemptions allowed under both Texas and federal law,  most individuals that file Chapter 7 keep all of their assets and discharge all of their debts in just a few months. You are then free to begin re-establishing your credit and Erin has creditors who will assist you do that after your Chapter 7 discharge has been received.  
• Chapter 11 Bankruptcy. Chapter 11 bankruptcy is usually used by large corporations that need to reorganize their debt. Filers must propose a reorganization plan that will need to be approved by their creditors. If  creditors object to the proposed Chapter 11 plan, the bankruptcy judge will evaluate the feasibility and fairness of the plan and determine if it can be confirmed. 
• Chapter 12 Bankruptcy. This highly specific type of bankruptcy is designed to help commercial farmers and fishermen reorganize their debts.
• Chapter 13 Bankruptcy. When you file for Chapter 13 bankruptcy, you commit to an active bankruptcy case that will last between three to five years. Your wages will be garnished for three to five years so that your creditors can be paid.  Your income tax refunds are also garnished during that three to five year time period.  Therefore, Erin uses Chapter 13 bankruptcy very rarely and only as a last resort. Do not file for Chapter 13 bankruptcy without exploring the full extent of your options with a free consultation at Erin Baker Shank, P.C. 

Deciding When Bankruptcy Is Your Best Option

Bankruptcy may not be the best path forward, even if you are facing severe financial difficulties. You may understandably have trouble weighing the pros and cons of filing. Fortunately, you are not alone, and resources are available to help you decide what to do next. 

Though Erin focuses her legal practice on bankruptcy, she recognizes it is not the right choice for every situation.  After analyzing your circumstances and walking you through what filing can (and cannot) do for you, she will answer your questions, address your concerns, and reviews non-bankruptcy alternatives with you. 

As an individual, bankruptcy may be right for you if:

• You have substantial amounts of medical debt and/or credit card debt. Chapter 7 bankruptcy can quickly wipe out these types of debts. You can also  eliminate tax debt owed to the IRS if the debt is over three years old.  Student loans are not dischargeable in any type of bankruptcy case in Texas, due to rulings by the Fifth Circuit Court of Appeals which is the federal appellate court for Texas.  
• Bankruptcy exemptions can protect your assets. Texas and federal law offers a wide range of exemptions that allow Chapter 7 filers to keep most of their property, including their home and vehicles. Erin is very familiar with these laws and can advise your regarding retaining  your assets.  

If you have fallen behind on mortgage payments, you may not necessarily need to file for bankruptcy. We can explore and pursue other foreclosure defense options, including home loan modifications. If you have been told that the only way to save your home if you are not current on your mortgage is to file Chapter 13, please see us for a free initial consultation. 

You can choose to file for bankruptcy with or without your spouse. Each approach has advantages and disadvantages, and Erin can discuss the ramifications of either choice.  Even if your spouse will not be joining you in the bankruptcy filing, Erin likes to meet with you and your non-filing spouse to explain the entire bankruptcy process and make sure both you and your spouse are aware of any effects your bankruptcy filling may have on your family's budget. 

The firm's bankruptcy services in Killeen & Waco also include assistance with long-term financial recovery. To that end, Erin and her team will review your credit reports and make sure any problematic creditors are included in your bankruptcy filing. After you receive your discharge, Erin will send the Discharge Order to the credit reporting  agencies (Experian, Transunion and Equifax)  and they will send you corrected credit reports reflecting that your debt has been discharged within thirty days after you receive your bankruptcy discharge.  Erin provides this service free of charge to all of her clients. 

How Do I File for Bankruptcy in Texas?

Though emergency filings are sometimes required if you are facing imminent foreclosure, it is rarely a good idea to rush into bankruptcy. A successful case requires that your bankruptcy paperwork be prepared completely, accurately and truthfully.  Erin has represented over 6,000 individuals from Central Texas address their financial challenges and so she is very qualified to help you put your financial struggles behind you. 

To successfully file for bankruptcy in Texas, you must:

• Gather financial records. You will need six months of bank statements for you and your spouse, your two most recent federal income tax returns, pay stubs for both you and your spouse for the six months before your case is filed,  recent divorce decrees, copies of wills showing inheritance issues, and any other document that may be relevant to your financial situation. Erin will thoroughly review all financial records to confirm you will be able to protect all assets you wish to keep and discharge your debts.  
• Complete mandatory credit counseling and debtor education courses. You must complete a court-approved credit counseling course before you file and a debtor education course after you file.  The fees for these course are included in the one fee that you pay Erin Baker Shank, P.C. and we will email you the link to these classes so that you can take them from the comfort of your home.  After you complete these courses, we are emailed your certificate of completion from the course instructor and efile it in your bankruptcy case. 
• Choose a bankruptcy type to pursue. Most Texans will realistically choose between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 is generally quick and painless.  You have one quick telephonic meeting with Erin and the Chapter 7 Trustee after your case is filed and you are discharged in three months.  Your wages and income tax refunds are not garnished to pay your creditors.  Chapter 13 bankruptcy is much longer, more complicated and generally very unpleasant.: Your wages and income tax refunds will be garnished and   your employer will be notified of your bankruptcy filing. You will not receive a discharge from your debts until you make all plan payments over a period of three to five years. Chapter 13 should consequently only be used as a last resort. If you have been told that Chapter 13 is your only option, please see us for a free initial consultation so that we can discuss alternative ways to address your financial situation. 
• File your bankruptcy paperwork with the court. Once your attorney=s fees and expenses have been paid and you have given Erin all of the required documents, the paralegal assigned to your case will complete a first draft of your bankruptcy documents. Erin will then schedule a Zoom meeting with you. During this meeting, she will personally go over every document with you to verify it is completed accurately. Erin will then collect your signature electronically and file your case. You will meet with the Chapter 7 Trustee about thirty days later. Erin meets with you the night before that meeting (via phone) and then is on the phone with you while you meet with the bankruptcy trustee. 

How Will Bankruptcy Affect My Credit?

Contrary to what many people believe, bankruptcy will not necessarily have a negative effect on your credit. In fact, many people end up with a better credit score after filing. Keep in mind that your credit is already in jeopardy if you are unable to keep up with the monthly payments on your debts.  Bankruptcy can discharge you from your debt and put you on the road to financial recovery.  Erin works with a very large, local car dealership who has  financed  new or used vehicles for hundreds of her clients after they have received their Chapter 7 discharge. Many of Erin=s clients have found that there credit score is actually increased after their overwhelming debt is wiped out in with a bankruptcy filing.  

Can I Keep My Property after Filing for Bankruptcy in Texas?

In many cases, yes. Chapter 7 bankruptcy does involve a liquidation process, but Texas offers generous exemptions that allow you to protect many types of property (up to a certain value amount). 

In a Texas Chapter 7 bankruptcy, you can exempt:

• Your home. If you live in the city, you can exempt your home if the property is ten acres or less in size, no matter the property=s value. If you live in the country, you can keep your home if the property is 200 acres or less (if you are a member of a family) or 100 acres or less (if you are single). 
• Your car or vehicle. You can also exempt your vehicles as long as you continue to pay the lender who financed those purchases for you.  
• Your retirement accounts. Pensions, IRAs, 401(k)s, and other popular retirement accounts are exempt if their value does not exceed $1 million.
• Your personal property. You can keep the contents of your home if its collective value does not exceed $50,000 (if you are single) or $100,000 (if you are a member of a family). 

Can I Discharge My Student Loan Debt through Bankruptcy?

Unfortunately, no student loans are discharged in bankruptcy cases filed in Texas.  The United States Fifth Circuit, which is the federal appellate court for the entire State of Texas, has made entered rulings that make it impossible to discharge student loan debt in Texas bankruptcies  Erin frequently advises clients on the availability of financial relief through income based contingent repayment plans.  Erin also has lobbied Congress to attempt to restore the ability to discharge student loans in bankruptcy cases.  These efforts continue and if the ability to discharge student loan debt is restored by Congress and the President, Erin will be fully aware of that law and the ability of her clients to use it.