Higgins and Associates » Chapter 7 Bankrupcy

How to Get Texas Chapter 7 Bankruptcy Help the Right Way

jmalewitz — Thu, 29 Jul 2010 04:55:38 +0000

Chapter 7 bankruptcy is about discharging your debt legally so you can get a fresh start financially. Many misunderstand their options when it comes to bankruptcy. In other cases, they don’t take the time to study how bankruptcy will help. Even more often, they don’t ask for help or ask the wrong people. This blog guide helps you discharge the most debt with a Chapter 7 bankruptcy, guiding you through unsecured and secured debts you can eliminate.

Discharging Debt
Once a debt is discharged, you are free of any personal liability you have for these debts. So if you discharge $20,000 in credit or medical debt, for example, you will be completely free of these debts. There are certain types of debt you can and can’t discharge with a bankruptcy, and also some which you may not want to discharge in order to keep assets.

You can discharge medical, credit, mortgage, and many other debts. Some debts such as alimony, child support, and taxes cannot be discharged. Still more debts you may not want to discharge, such as your mortgage debt or car debt; if you do, you can lose them. In order to get help in this situation, contact an experienced Texas bankruptcy lawyer.

When are you discharged?
In a Chapter 7 case, you are typically discharged of debt in a matter of months. In a Chapter 13 bankruptcy discharge, it takes much longer – usually about 4 years time.

Discharging Secured Debts
You can discharge your mortgage and car debts. If you owe a lot of money on them and have decided not to fight to keep them, being free of the debt is a big help. Also, discharging secured debts such as your home does not mean you are homeless immediately. The “automatic stay” made by the judge after filing puts a hold on all collections against you. And you can likely keep your home for several months without paying a penny, just be sure to find a new residence.

Unsecured Debt
Unsecured debts are the prime reason to file Chapter 7 bankruptcy. The Texas economy is strong in comparison to other states with high numbers of bankruptcies and foreclosures, but debt is of course still a problem, In fact, many lack health insurance, end up having to get medical help, and then end up in danger of losing all their assets. If you have unsecured debt you simply cannot afford, usually you have the right to discharge it, even if it’s very high. If you have $100,000 in credit and medical debt, for example, you can be free of it in a matter of months.

Texas Bankruptcy Experts
You need a lawyer if you want to successfully file Texas Chapter 7 bankruptcy. It will be easier in and out of court. You will rarely have much of a role in court, but out of court you’ll be making some key decisions. In order to keep the most assets and discharge the most debt, hiring a lawyer is very important.

Fear and Texas Chapter 7 Bankruptcy

jmalewitz — Wed, 21 Jul 2010 20:59:12 +0000

Filing bankruptcy is not the most enjoyable process you’ll ever have to go through. However, it has so many advantages for you that life after filing will be much better financially. Now, fearing you’ll lose everything, fearing Texas bankruptcy court, worried you won’t be able to afford a lawyer, that you will in fact be worse off after – these are very common concerns. There is nothing to be ashamed of when it comes to bankruptcy. Let this guide point you in the right direction to saving time, money, and headaches by filing Texas Chapter 7 bankruptcy.

Losing Everything (You Won’t)
One of the common misconceptions concerning bankruptcy is that all your assets will be taken. In fact, most bankruptcy filers, whether it’s Chapter 7 or Chapter 13 personal bankruptcy, lose absolutely nothing. That’s right: you do not lose your home and car. In cases where you are in danger of losing key assets, you still have plenty chances to keep them. There are rules to follow; technically in Chapter 7 your trustee will be in charge of liquidating assets. But again, few lose anything. The laws are designed to give, not take.

Fearing Debt
The Texas economy has been hit hard by the recent downturn in jobs and increase in bankruptcies, but not nearly as hard as other states. Where some states have incredibly high debt and foreclosure rates, Texas is in better shape. That means you are logically in a better economy for getting back on your feet. If you fear debts will be the end of you, Chapter 7 bankruptcy is an answer. All too often, home owners wait until foreclosure begins to get help. Or you try paying an exceedingly high medical debt off on a budget while trying to support a family. Debt is a problem with an answer.

Fearing Creditors
Creditor harassment is more of a reality than a fear. If creditors are making you loath coming home after working or sitting down in the morning, if your phone is a constant point of anger, you do have rights. First, if you file Chapter 7 bankruptcy, most creditor harassment will stop. Also, they have little right to your money after filing Chapter 7. In fact, you can keep your assets and be free of debt collections.

Lawyer Fees
Lawyer fees are a reality too, but a good one. Would you hire the cheapest doctor in town for heart surgery? Well, maybe that’s a bit extreme, but the fact you hire someone to help you with the legal process has far more benefits than downfalls. Lawyer fees are small in comparison to the benefits, especially if you can discharge tens of thousands in debt, be free of creditors, and keep all your assets.

Eligibility
Unfortunately there is a chance you won’t be eligible for Chapter 7 bankruptcy. This is because of new Bankruptcy Code basing eligibility on income. If you make more than the median income of Texas, you have to file Chapter 13. Texas Chapter 13 bankruptcy can save you a lot of assets too.

What You Can Fear
There really is nothing to fear when it comes to any form of personal bankruptcy. You can worry about the day to day things once you get through this. Consider it an opportunity, a fresh start financially.

Your Texas Home and Chapter 7 Bankruptcy

jmalewitz — Mon, 12 Jul 2010 22:23:16 +0000

While Chapter 7 bankruptcy cannot save your home from foreclosure, it does give you many options which help you financially. Why can’t Chapter 7 bankruptcy stop a foreclosure? What’s the best way to save your Texas home? If you lose it, will you still owe money? First, let’s go over the advantages.

Advantages of Chapter 7
You can almost always save money by filing Chapter 7. This occurs because you can stay in the home during and some time after the bankruptcy. By law, all collections against you stop once you file bankruptcy. You can quite often stay in the home several months after, paying nothing on the mortgage. You can also cancel the debts you owe on the home, including any second mortgages. So you can stay in the home for some months and pay nothing, and then discharge the debt. For Texas home owners, this may not be enough.

Why Can’t You Save Your Home?
Technically, you cannot cancel a foreclosure by filing Chapter 7. You can discharge some of the debt, but not the debt on the lien of the house. The lien cannot be discharged. This may sound unfair. You can be completely free of the debt, but you lose your home. You do have other options.

Other Options
You can do many other things to stop a foreclosure and its effects. You may be able to sell the home on a short sale. You can also file for Chapter 13 bankruptcy, perhaps the best way to save your Texas home. Chapter 7 is not for everyone. You quite often lose property. You sometimes lose other assets. But if you can discharge thousands in debt, it can still be beneficial.

More on Chapter 13
How does Chapter 13 bankruptcy save your home? Chapter 13 makes it so you can pay on some or all your debts over a more manageable period. Though foreclosures are far less common in Texas than other states, many home owners use Chapter 13 to avoid the problem. There is some fine print: you have to file before papers are entered to foreclose your home. If the foreclosure process is ongoing, you cannot just decide to file. You need to file Chapter 13 before the foreclosure papers are in; the best time is when you know you won’t be able to make payments in full.

How to Get Help
You need an experienced Texas bankruptcy lawyer any time you fear foreclosure and want to file bankruptcy. A lawyer can explain your best options. You may not be able to pay with Chapter 13, but can buy enough time to get into a new residence with Chapter 7. A good lawyer can quite often save you far more money than he or she charges when it comes to discharging debts and saving assets.

Filing Chapter 7 Bankruptcy in Forth Worth

jmalewitz — Fri, 25 Jun 2010 21:10:12 +0000

It takes time to do anything worthwhile, but when it comes to filing for bankruptcy, time is money. If you want to discharge debts, you may fear losing assets. They’ll take your home and car, you’ll be unable to get a new mortgage or loan, and your bank account will quickly shrink, right? Even worse, how can you pay a lawyer when money is the problem?

If you file in Fort Worth, Texas, Chapter 7 bankruptcy is an effective way to discharge debts, to save time and money, and to keep your assets. You need not fear losing your car; in the majority of Texas Chapter 7 bankruptcies the filers lose nothing. You will have a hard time getting a new mortgage or loan immediately, but if you start rebuilding your credit it won’t be long before you can. And if you hire the right Fort Worth bankruptcy lawyer, you won’t be overcharged.

So how do you start?

The First Step
Should you file? And what about Chapter 13 bankruptcy? The first step is deciding if you can file. You may not be eligible, for one, but you also might have some better alternatives. There are options other than Chapter 7 bankruptcy, such as filing Chapter 13. In some cases, you may not even have to file bankruptcy at all. But bankruptcy can effectively solve many debt problems in a matter of months.

Chapter 7 bankruptcy is a liquidation proceeding, where a court appointed trustee will be selling your assets to pay back debt. They sell your stuff? Yes, by law they can. As stated earlier, the great majority of filers lose absolutely nothing. If you are about to lose your home or car, you can set up a separate plan with the trustee to start paying on it; this is perfectly legal and very common.

What debts can you discharge?
The most common debts in Texas and in the whole country are medical, credit, and mortgage debts. A recent study highlighted how, surprisingly, credit cards are not the main problem. Medical debts are the most common reason for filing bankruptcy in the country. This means more people file for help not because of cards of plastic or homes, but for rooms at hospitals and expensive medications. It makes sense: millions of U.S citizens have no health insurance. It’s unfortunate, but you can discharge tens of thousands of debt you simply cannot afford by filing Chapter 7 bankruptcy.

Are you eligible?
Unfortunately, while most Fort Worth residents are eligible for Chapter 13 bankruptcy, the same residents may not be eligible for Chapter 7. It’s because you make too much money in most cases. With Chapter 13, unless you have hundreds of thousands in debt, you are eligible. If you make more than the median Texas income for 2010, you are not eligible for Chapter 7.

1 Person – Annual Income Less Than $38,801
Family of 2 – Annual Income of Less than $55,660
Family of 3 – Annual Income of Less Than $59,011
Family of 4 – Annual Income of Less than $66,145
Add $7,500 in most cases per any additional family members.

Is Chapter 13 better?
Chapter 13 bankruptcy is less common because it means you’ll be paying off on debts, not eliminating them. It’s benefits include many of the same as Chapter 7, though it’s better if you fear foreclosure. It’s different, not better or worse.

You should consult with a Forth Worth bankruptcy lawyer before you make any big decisions. Most will be affordable, give you a free consultation, and clearly show you their experience.

Making the Texas Bankruptcy Decision

jmalewitz — Thu, 17 Jun 2010 21:45:42 +0000

Still not sure if filing bankruptcy is for you? Clearly there are many ways to look at it, advantages and disadvantages to filing, and the fear it can bring. For one, bankruptcy is a solution, a tool designed to help. It can be a life changing event, but for the good. For one, some think that by filing, you’re giving up all your assets, you’re ruining your credit, or even worse, that you’ll never be free of it. There are many other myths too, but remember the earlier point, that bankruptcy is a tool, and you can be free of this.

This post will help you make decisions beyond the myths, to help your finances and give you a fresh start.

Myths of Bankruptcy
For Texas bankruptcy, common culprits are bills, debts, and cards made of plastic. The myths abound. You won’t have to pay back taxes or alimony (you will). Bankruptcy will ruin your credit (it won’t). That you’ll lose all your assets with Chapter 7 (you rarely lose anything). That you won’t be able to afford to pay back debts, even with a Chapter 13 repayment plan (many can). Bankruptcy won’t give you a bad name, won’t make it impossible to get a loan, and you certainly won’t lose all your assets. Remember this is a tool, and over 1 million use it every year to successfully discharge debt, save property, save money, and save time.

Advantages of Bankruptcy
This all depends on the form of Texas bankruptcy you want to file. We go over Chapter 7 and Chapter 13 many times on the Higgins and Associates blog. The biggest benefits for each is simple. Chapter 7 can discharge pretty much all your debt. Chapter 13 can pay it back, but save assets like your home from being lost.

There are other benefits. In both forms of personal bankruptcy, you can be free of creditor harassment. In both forms, you can successfully rebuild your credit; if it’s already bad, you can get a fresh start building it by handling your credit correctly. And if you choose to file Texas personal bankruptcy, you need not live in fear of the repo-man or your home being taken.

Disadvantages of Bankruptcy
Bankruptcy will stay on your credit for 10 years. It will be hard to get a major loan for some time, such as a new mortgage, but it’s more than possible. You won’t discharge all debt with Chapter 7, and sometimes your creditors can appeal your filing. For Chapter 13, you are still liable for debts: if you cannot pay at least some amount, you may start running out of options.

Making the Choice
If you need help making the choice, you don’t call your creditors. You call someone who can help, like an experienced Texas bankruptcy attorney. You first should research how bankruptcy works, what you’re eligible for, what debts you can discharge, how long the process takes, and what’s expected from you if you want to keep your assets. These decisions are better made with an educated mind.

Asking for Help
Asking for helping is always tough, but when making a decision on bankruptcy, it’s simply a must. You cannot file for Texas bankruptcy without some guidance of a professional. It’s worth the time and money to search for and hire a lawyer, because he or she will actually save you from major mistakes, and save you money by making the bankruptcy work for you.

Now that you’ve finished, it’s time to make that big choice. Remember not to make it alone.

How Much Does Texas Chapter 7 Cost?

jmalewitz — Mon, 14 Jun 2010 19:29:45 +0000

You’re going to file bankruptcy because you have little to no income, so how can you be expected to pay for a lawyer and pay court fees?

Well, you’re not always filing bankruptcy because you’re flat broke. Sometimes you do it simply to consolidate, if not completely eliminate, debt which will take all the money out of your pocket to pay creditors. If you are low on cash, you might wonder if you can do this whole process yourself. Even if you have money, you may wonder exactly how much this process will cost you. Let’s find out.

Texas Chapter 7 – Costs
To file for Chapter 7 bankruptcy anywhere in the country, you will pay a court fee of $299. Chapter 13 will cost you $274.

Now, hiring a lawyer is where the price can seem high. A typical Texas Chapter 7 case will cost from $1,000 to $2,500. That may seem quite high, but because the benefits themselves are so high, it’s more than worth it. A Texas bankruptcy lawyer saves you time and money, does not take it. This is usually a flat rate for all filers. Also, many lawyers are willing to negotiate payment, if not also setting you up on a payment plan. Few can just pull $2,000 out of the bank, but if you can eliminate $20,000 in debt, that’s a whole different story.

Benefits of Texas Chapter 7
Most are eligible for Chapter 7 bankruptcy, most can discharge the majority of their debt, and you likely won’t lose any assets. Many filers believe they might lose their car or home. This does occur, which is why a lawyer handling your case is more than worth it. With an experienced lawyer, you can stop a foreclosure on your home, set up a payment plan on your home and car, and keep most other assets.

Say you have $20,000 in credit card debt; you can discharge all this money for a fraction of the total. Or say you have over $100,000 in medical debt from when you were hurt and did not have insurance; in this case, Chapter 7 is you best option and the fees seem minor.

Chapter 7 bankruptcy allows for you to be free of most debt, and there is no fine print. You can in some cases lose assets, and certain forms of debt cannot be included, but really it can be a life changing decision.

Can you do it yourself?
Technically you could operate on yourself, but few try that. Yes, you can handle a bankruptcy by yourself, sometimes even with success. It just depends on your situation. In some cases, it’s very understandable to forgo a lawyer, but when your entire financial future is on the line, you might want to be careful. The benefits of hiring an experienced bankruptcy lawyer are known the the thousands who successfully file in Texas every year.

How should you hire a Texas bankruptcy lawyer?
Hiring an experienced Texas bankruptcy lawyer is the first step in filing Chapter 7. If you want to discharge the majority of your debt, protect your assets, and be free of creditor harassment, it’s a wise choice. If you’re in the Dallas/Fort Worth area of Texas, we can handle your case.

Property You Can Keep After Texas Bankruptcy

jmalewitz — Fri, 11 Jun 2010 18:53:33 +0000

Common bankruptcy questions we hear include worries on losing major assets such as a home and car. You’re right to be concerned about these things, as you can lose some assets when filing bankruptcy. However, most bankruptcy filers lose absolutely nothing.

You have to look at what got you into this situation, what want to keep, and what you’re willing to lose. Technically, you can keep major assets if you can afford them. You can hold on to your home, vehicle, and valuable assets such as jewelry, even in a Chapter 7 bankruptcy. First let’s go over what you can legally keep, what you may lose, and then how to keep the most assets.

What You Can Keep
If you’ve lived in Texas all your life, or even just a few years, you are legally able to keep the majority of your assets in a Chapter 7 bankruptcy. Chapter 7 is where you file to discharge debts, with the point being some of your assets may be sold to pay back creditors; in other words, you liquidate items to pay debts. Again, it’s rare you actually have assets sold, but a trustee appointed by the bankruptcy judge can do precisely that by law.

Exactly what can you keep?
-You can keep any equity you have in your home, as well as all home furnishings up to $30,000.
-You can also keep jewelry and heirlooms up to $7,500.
-Bicycles, guns, and sporting equipment are usually exempt.
-You can keep your car usually, sometimes more than one if multiple family members have cars and depend on them.
-Social security benefits are always exempt, as are retirement accounts.

By law, child support and back taxes cannot be discharged in personal bankruptcy. If you’re hoping to discharge these debts, Chapter 7 simply will not work. You are legally bound to pay them. But as you can see, the majority of your major assets can be exempt.

Advantages of Texas Chapter 7
Most are eligible for Chapter 7 bankruptcy, but if you make a lot of money, you may be required to create the debt repayment plan involved in Chapter 13. Chapter 7, as earlier noted, discharges debts and is far more common than Chapter 13. You can in most cases keep your home. If any assets such as your car or home are not exempt, you can legally pay the court appointed trustee in order to keep it; that means you can pay on certain debts. You just have to have the money do so.

Chapter 7 bankruptcy has the most direct effect of any bankruptcy filing. It can eliminate the majority of your major debts and give you a fresh start. It only takes a few months to go through. And an experienced Texas bankruptcy attorney in your area can help with topics such as exempt and nonexempt assets.

Advantage of Texas Chapter 13
Chapter 13 is less effective in removing your debt obligations, but you can use it to save assets. In some cases, Texas filers who make more than the state average are not eligible for Chapter 7. Don’t worry: Chapter 13 has its own advantages. It’s the best way to stop a foreclosure before it happens. As long as no foreclosure papers have been filed, you can file Chapter 13, a judge will put an automatic stay on your home, and you can start making more affordable payments on it. It’s the same with all your assets. Nothing will be sold. You will create a debt repayment plan in order to make these debts affordable.

Keeping Assets – The First Step
You need an experienced Texas bankruptcy attorney to look over your situation. He or she can go over eligibility, exempt and nonexempt property, help you keep assets with Chapter 7, and help you save your home from foreclosure with Chapter 13.

Choosing Forms of Personal Bankruptcy in Lake Worth Texas

jmalewitz — Wed, 09 Jun 2010 20:46:30 +0000

Lake Worth may be that little Texas city compared to Dallas, but when it comes to financial problems, it really doesn’t matter. Unfortunately, Lake Worth bankruptcies have been high in recent years. Recent research reports that the median income for Lake Worth residents is at about $40,000 a year. This is important because of the rise in bankruptcies and nationwide in past years.

You lose your job, you don’t have insurance and get a major injury with medical bills looming, or your home is about to go into foreclosure. What do you do next?

For personal bankruptcy, your options are Chapter 7 or Chapter 13. If you want to eliminate thousands in debt because you have little to no income, Chapter 7 is wise. If you have an income but want to rework your payments, Chapter 13 is very smart. Let’s go into the details even more.

Chapter 7
Chapter 7 bankruptcy is a liquidation. You file with Texas bankruptcy court, paying the fee of $299, and then a trustee is appointed to handle your case. This trustee will be in charge of liquidating some if any nonexempt assets you have. That means the trustee will sell your possessions to pay back your creditors. In most cases, you don’t lose anything.

You can discharge much of your debt, including credit card, mortgage, and medical bills. You cannot discharge taxes, alimony, child support, and time other debts.

Chapter 7 is smart if you have little income and sometimes if you have little assets. It only takes a few months to go through,and you get a fresh start financially. The majority of Lake Worth bankruptcies are Chapter 7.

Chapter 13
Chapter 13 bankruptcies are used less in Lake Worth and nationwide. About 25% of personal bankruptcy is Chapter 13, while 75% is Chapter 7. Chapter 13 is a debt repayment plan, not a discharge of debt. For example, if you have $5,000 in credit card debt, you will be reworking payments, but still paying for them. That’s the main reason more Lake Worth residents file Chapter 7. However, Chapter 13 can save your home from foreclosure; Chapter 7 cannot.

Foreclosures
It works like this. If you miss a few payments for your Lake Worth home, and foreclosure is on the horizon, you can file Chapter 13 and if successful a judge will put an “automatic stay” on your home. The lender cannot foreclose your property. If you’ve owned this home for years and love it, and if you’ve put a lot of time and money into it, Chapter 13 can effectively save it.

Credit Cards
On the other hand, if credit and medical debt is your main problem, Chapter 7 is better. It can also discharge mortgage debt, but you’ll typically lose the home in a matter of months unless you can afford to pay on it separately.

Creditors
If creditors are harassing you night sand day, both forms of personal bankruptcy can effectively stop it. So can an experienced Lake Worth bankruptcy attorney.

Lake Worth Bankruptcy Attorney
Does some of this sound like a textbook on legal information? That’s because it’s complicated to file bankruptcy. You need to hire an Lake Worth bankruptcy attorney to answer questions, solve problems, and help choose between Chapter 7 and Chapter 13.

Problem – What if You’re Not Eligible for Chapter 7 Bankruptcy

jmalewitz — Sat, 22 May 2010 02:53:11 +0000

What if you find out you’re not eligible for Chapter 7 bankruptcy? For Texas bankruptcy, this problem is unfortunately common. However, many are still eligible for bankruptcy. Under new bankruptcy code, you are eligible based on income. For Texas residents, the numbers are as follows.

That’s the laws for Texas, and are different for other states. If you, for instance, are a married family of 3 including one child, and you make $50,000 combined, you are likely eligible. If you make $65,000 combined and you live in Texas, you are not eligible. Again, these are the numbers for Texas median incomes. For other states, look on the web for the 2010 annual median income and you can find out.

What is Chapter 7 Bankruptcy?
For Texas and other states, the main goals of Chapter 7 bankruptcy are pretty common. One of the biggest reasons individuals and families file for bankruptcy is because of medical bills; some studies say as many as 60% of bankruptcies are caused by medical problems. Chapter 7, a liquidation proceeding, can eliminate these debts.

What if You Make too Much Money?
Okay, so you’re not eligible for Chapter 7. What are your options? You can still file under Chapter 13. Chapter 13 is a debt repayment plan; you pay back debts instead of discharging them. The good news is, there are key advantages to Chapter 13.

What if You’re Behind on Mortgage Payments?
One of the biggest benefits of Chapter 13 bankruptcy is being able to keep your home. Say you are married, you and your spouse make $80,000 year, and you have two children. You make too much, for Texas residents at least, to file for Chapter 7. But, if you own a home and want to keep it, you can successfully head off foreclosure with Chapter 13. How? Chapter 13 comes with an “automatic stay” where your creditors cannot seize any property. If you are eligible, if you can maintain mortgage payments, you can save your home.

How Do You Qualify for Chapter 13?
If you make too much for Chapter 7 bankruptcy, Chapter 13 is a good option. Now, you still have to be eligible. For every citizen the of the U.S. there is a set amount for Chapter 13 eligibility. You must have secured debts less than $1,010,650, and unsecured debts of $336,900. Most are easily eligible.

Can You Negotiate Outside Bankruptcy?
Yes, there are alternatives to bankruptcy. Bankruptcy has negatives; it would be wrong to say otherwise. But more often than not, simply negotiating with creditors or hoping you get enough money to pay back debts does not work. If you are one of the many with high credit card and/or medical debt, Chapter 7 is your best option. If you have a high paying job but are falling behind on bills and mortgage payments, Chapter 13 is very good.

Co-Debtor: Understand Their Role in Your Bankruptcy

H&A — Tue, 25 Mar 2008 20:52:35 +0000

When an individual files for bankruptcy they may have obtained a loan with a friend, spouse or family member. By doing this, they are on the loan together and enjoy the same benefits of the loan if timely paid as well as the same liabilities if the loan is defaulted.In Bankruptcy, if an individual is on a loan with another person that has not filed bankruptcy; the non-filing person obtains the same benefits of the protection of the bankruptcy case as the individual that did file from that particular creditor.

After someone files for bankruptcy the protection from creditors is automatically put into place. This protection prevents any creditors from collecting or taking any action to secure their interest on a loan against the bankruptcy filer.

At the same time, this protection is extended to a non-bankruptcy filer as well. This is a very generous benefit that a co-signor has even when they have not filed for bankruptcy. However, this benefit is not as far reaching as it may seem.

When a person files for bankruptcy they are generally trying to either reorganize their debts by making a monthly payment under Chapter 13 to keep a house or car, or they are seeking a completed discharge of their debts subject to the liquidation of their assets under Chapter 7.

In either case, if the individual that filed for bankruptcy cosigned a loan with another party that has not filed for bankruptcy, both will be protected from any collection efforts. However, if the individual that filed for bankruptcy decides to return the item back to the creditor or defaults on the loan while in bankruptcy that the non-filer cosigned a loan for, then the non-filer is no longer protected and the creditor can start making collection attempts against the non-filer.

Unfortunately, the non-filer will be on the hook unless he or she files a bankruptcy themselves, whereas the filing party receives the benefit of a complete discharge of the debt if they defaulted on the loan.

The co-debtor stay is most common for people who are married and only one spouse files for bankruptcy. In Texas, it is a community property estate; therefore, it is also a community debt state. Meaning, that a couple that incurs debt together during the marriage, regardless if the debt is only in the name of one spouse, the creditor may look to both of them for the debt because the presumption is they both received the use and enjoyment of the item or items purchased.

If one spouse files for bankruptcy and the other does not, the non-filing spouse will be protected from all creditors as long as the bankruptcy case continues. However, any debts that a creditor can prove are community debts remain against the non-filing spouse after the case is concluded. Therefore, it is almost always advisable, if married, to file a joint bankruptcy case.

The underlying principal is that the law in bankruptcy is set up to protect individuals and their property from any collection activities, even those individuals that did not file but are a co-signor or guarantor of a loan that is in bankruptcy.

However, the protection is only available for a period of time until the creditor decides to file a motion in the bankruptcy court or until the bankruptcy case is completed.