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What is bankruptcy in simple terms ?

Declaring bankruptcy is seeking legal protection from your creditors (people you owe money to). As far as personal bankruptcies go, chapter 7 is what people generally think of when they bankruptcy. The courts allow you to discharge your unsecured debts (credit cards, medical bills, personal/ payday loans, civil lawsuits, repossessed vehicles, foreclosed real estate, etc). The entire process takes a few months to be discharged and you also have to income qualify- if you make more than the median income in your state you would have to pay back some portion of your debts. You can only do this once every eight years for a chapter 7, and 4 once every 4

years for a chapter 13.

A chapter 13 is a bit different and can deal with other debts as well as unsecured. You would file this if you make too much for a chapter 7, if you are behind on a financed vehicle/ real estate that you want to keep, if you have a lot of back taxes to pay off or to freeze student loans. A monthly payment would be determined based on which of those debts are being dealt with, how much the debts are and also on your income. You would make this payment to a bankruptcy trustee for 3-5 years and your unsecured creditors would receive a percentage of their debts, secured creditors receive 100% (generally). You would be discharged of any unpaid debts at the end of the bankruptcy.

Call the Rashid Law Firm if your in or around the general Houston area and want to file bankruptcy.

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