Legal Question in Bankruptcy in Texas

Re: Chapter 7 or Chapter 13, how do I choose

Short answer -- I would suggest you try to file a chapter 7 case at least to begin with.

I advise all my prospective clients that they should file under 7 in most situations. It is significantly less expensive and most people don't need to take advantage of the strategies that are a part of Chapter 13. If you attempt to file a chapter 7 case and the Trustee assigned to your case (or another party) objects, your case would not be dismissed automatically. Your case could be easily converted by your attorney into a chapter 13 case.

The key test in terms of your specific situation will be gauging your monthly income and comparing this to your monthly expenses. A required part of any bankruptcy filing under Chapter 7 or 13 is a detailed list of your necessary monthly living expenses. This is an estimate however it should be relatively accurate. This monthly list would include such items as rent, car payments, food, utilities, etc. You would not include any payments of unsecured debts.

Basically, after subtracting your monthly expenses from your monthly net income your attorney can estimate your "disposable income" and from this he/she will have a good idea of the amount of money you have leftover to pay unsecured debts (i.e. credit cards). The Bankruptcy Code requires that essentially all unsecured debts must be treated equally. Therefore the percentage each credit card will receive in the proposed plan will be the same. As an example all unsecured creditors might received 5% or maybe 20%. Most filers have very little if any disposable income, but if you do then the Trustee assigned to your case could argue that you should be in chapter 13 using your "leftover" money to repay your unsecured debts. I hope this did not further confuse you. Please feel free to call me to discuss your situation in more detail. Ph. (800) 303-0720 or (214) 979-7330