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How is Chapter 7 beneficial and what are its out of pocket costs?


The term "Chapter 7 bankruptcy" might be vaguely familiar to people in Texas as a potential way to deal with out of control debt. Some will mistakenly see it as a negative. Others might not know the entire scope of how beneficial it can be to someone who needs a fresh financial start. Two issues within filing for Chapter 7 that must be fully understood and might assuage certain fears that people might have are the primary purposes of Chapter 7 for individuals and what will have to be paid out of pocket at the time of the filing.

Chapter 7 bankruptcy will allow a debtor to discard certain debts and allow the person to start over. With discharged debts, there is no longer any liability. It must be remembered that with Chapter 7, the discharge can only be received by individual debtors. It cannot be given to a partnership or a corporation. In general, Chapter 7 will let a debtor have the debts discharged. That said, it is not guaranteed. There are certain debts that cannot be discharged. In addition, when there is a lien on a property, it will not be cleared by a discharge through Chapter 7.

As for the costs, the court will charge $245 to file. There will be a $75 charge for administrative fees. The trustee surcharge is $15. When the filing is made, the payments must be made to the clerk. The court can let individual debtors make the filing payments in installments. There is a maximum of four installments and the debtor must make the final payment a maximum of 120 days after the petition has been filed. It is possible for the installment to be extended if there is cause as long as it is paid within 180 days after the petition. The administrative fees and the trustee surcharge can also be paid in installments. Failure to pay the fees in a timely manner can lead to the case being dismissed.

Since there are so many small issues that need to be navigated in a Chapter 7 case, it is wise for those who are at the point where they are thinking about filing to have legal help. For assistance with these seemingly small issues as well as the larger ones that inevitably arise in a bankruptcy, speaking to a legal professional who is experienced in Chapter 7 bankruptcy is advisable.

Source: uscourts.gov, "Chapter 7 -- Bankruptcy Basics -- Chapter 7 Eligibility; How Chapter 7 Works," accessed on Nov. 22, 2016

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