Although it is often the last thing that a debtor wants to consider when they are facing insurmountable financial challenges, bankruptcy is an excellent option for many people who want to be in control of their loans and other financial obligations. Texans have several options for bankruptcy that may allow them to receive judicial discharges of their debts and, depending upon the form of bankruptcy that they choose, the process of reaching a discharge can look very different.
Under a Chapter 7 plan a debtor must sell off or liquidate items of property that are not exempt under the bankruptcy rules. The proceeds of the property sales then may be applied to the debts the individual holds with their creditors; this will allow a debtor to achieve discharge under Chapter 7 bankruptcy.
However, not all debtors are prepared to part with their property. If they qualify, debtors may use Chapter 13 bankruptcy to satisfy their creditors through a reorganization plan. A debtor must show that,through the use of their disposable income and other reorganizational mechanisms, they can repay their creditors and get back on strong financial footing over a period of years.
Discharge in Chapter 13 can therefore take longer to reach than under a Chapter 7 plan. Also, a debtor must file and have approved a reorganization plan before they may move forward with their proceedings. Both bankruptcy options have advantages for individuals in different financial situations.
Reorganization under Chapter 13 bankruptcy is one way that debtors may manage their outstanding and past due loans and credit accounts. Before filing it is often beneficial for individuals to discuss their bankruptcy needs with attorneys who work in the bankruptcy field of law.