If you are considering filing for bankruptcy, we understand that you may have many questions. We cannot assure you that the information provided herein is comprehensive or will answer all of the questions you may have, but is intended to help address common questions and provide you with answers that will give you a foundation as you consider your options. To the extent that your question may not be answered here, or you would like to discuss the specifics of your situation in more detail, contact your local, Houston bankruptcy attorneys at Tran Singh LLP today at (832) 975-7300 or complete our Initial Consultation Form and rest assured one of our dedicated attorneys will contact you.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy, customarily referred to as a straight bankruptcy is a liquidation proceeding and is the most common form of bankruptcy filed in the United States. The primary purpose for filing any bankruptcy case is to discharge, or release, debts. In a Chapter 7 bankruptcy proceeding, depending on your specific situation, your unsecured debt is eliminated and, usually within a period of 4 months, the case is completed all permitted dischargeable debts are discharged forever, thus providing you with an opportunity for a fresh start without the overwhelming financial hardship those debts created. Particularly, Chapter 7 can be effective in financial hardships such as credit card debt, judgments, garnishments, lawsuits, medical bills, payday loans, deficiencies from repossessions or foreclosures, business debt or business closure. This is achieved by the bankruptcy trustee gathering and selling your non-exempt property and converting the proceeds to cash for distribution to the holders of claims (the creditors). Additionally, a Chapter 7 bankruptcy permits you to keep assets distinguished as exempt, which includes houses, cars and retirement accounts. 
 
It is important to note that, exempt and non-exempt property, and secured and unsecured debt, is governed by the U.S. Bankruptcy Code which can be confusing and difficult to decipher on your own, so although we can generally guide you with the resources available on our website, we encourage and recommend that you speak with your local, Houston qualified bankruptcy attorneys at Tran Singh LLP who are experienced in Chapter 7 liquidations.

We encourage you to navigate to Chapter 7 Bankruptcy for additional resources and information.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is reorganization specifically designed for individuals whose debts are no greater than $1,184,200.00 for secured debts and $394,725.00 for unsecured debts, and is the second most common form of bankruptcy filed in the United States. Under this chapter, debtors propose a repayment plan to make installments to creditors over a period of three to five years. Following such period, individuals are provided with an opportunity for a fresh start without the financial hardship of the overwhelming debt.
 
A Chapter 13 is a very powerful tool as it offers individual debtors a number of advantages over a Chapter 7 liquidation. The most significant of these advantages is that it provides the individual debtor with the opportunity to save their home from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over a period of time; however, it is worth noting that all mortgage payments that come due during the course of the Chapter 13 bankruptcy proceeding must be paid on time, when they come due. Another benefit of a Chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence), which are typically classified as debts for which the creditor has the right to take back certain property, or collateral, if the debtor does not pay the underlying debt, and extend them over the life of the Chapter 13 plan, which typically results in lower payments. Other advantages of a Chapter 13 bankruptcy proceeding include a special provision that may protect co-signers of a consumer debt, which is primarily classified as being for a debt for a personal, family or household purpose. And, lastly, a Chapter 13 bankruptcy is designed to require the debtor to make payments to the Chapter 13 Trustee, who then distributes payments to creditors, such that the individual debtor will have no direct contact with creditors.

We encourage you to navigate to Chapter 13 Bankruptcy for additional resources and information.

What is Chapter 11 bankruptcy?

Chapter 11 bankruptcy is commonly referred to as a reorganization, pursuant to which a debtor, which may be an individual or a business, may file for relief under the U.S. Bankruptcy Code. Individuals who do not qualify for Chapter 13 bankruptcy due to debt limitations, typically file for relief under Chapter 11. A Chapter 11 reorganization permits debtors to reorganize their debt obligations and pay their debts over time. This is especially attractive to businesses which may continue to operate while repaying their debts. Chapter 11 bankruptcies can vary greatly in size and complexity so its important that you speak with your local, Houston qualified bankruptcy attorneys at Tran Singh LLP who are experienced in Chapter 11 reorganizations.

We encourage you to navigate to Chapter 11 Bankruptcy for additional resources and information.

What is a discharge in bankruptcy? 

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.
 
Although a debtor is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

When does the discharge occur?

The timing of the discharge varies, depending on the chapter under which the case is filed. In a Chapter 7 bankruptcy case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 Meeting). Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court.
 
In individual Chapter 11 bankruptcy cases and Chapter 13 bankruptcy cases, the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. Since a Chapter 13 Plan may provide for payments to be made over three to five years, the discharge typically occurs about four years after the date of filing.
 
The court may deny an individual debtor’s discharge in a Chapter 7 bankruptcy case or a Chapter 13 bankruptcy case if the debtor fails to complete an instructional course concerning financial management.

How does the debtor get a discharge?

Unless there is litigation involving objections to the discharge, the debtor will usually automatically receive a discharge. The Federal Rules of Bankruptcy Procedure provide for the clerk of the bankruptcy court to mail a copy of the order of discharge to all creditors, the U.S. trustee, the trustee in the case, and the trustee's attorney, if any. The debtor and the debtor's attorney also receive copies of the discharge order. The notice, which is simply a copy of the final order of discharge, is not specific as to those debts determined by the court to be non-dischargeable (i.e., not covered by the discharge). The notice informs creditors generally that the debts owed to them have been discharged and that they should not attempt any further collection. They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt. Any inadvertent failure on the part of the clerk to send the debtor or any creditor a copy of the discharge order promptly within the time required by the rules does not affect the validity of the order granting the discharge.

Are all of the debtor's debts discharged or only some?

Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. § 523(a) of the Bankruptcy Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor, such as the debtor's drunken driving). There are 19 categories of debt excepted from discharge under Chapters 7 and 11. A more limited list of exceptions applies to cases under Chapter 13.
 
Generally speaking, the most common types of non-dischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.
 
A slightly broader discharge of debts is available to a debtor in a Chapter 13 bankruptcy case than in a Chapter 7 bankruptcy case. Debts dischargeable in a Chapter 13, but not in Chapter 7, include debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings. Although a Chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved (i.e., "confirmed") repayment plan, there are some limited circumstances under which the debtor may request the court to grant a "hardship discharge" even though the debtor has failed to complete plan payments. Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor's control. The scope of a Chapter 13 "hardship discharge" is similar to that in a Chapter 7 bankruptcy case with regard to the types of debts that are excepted from the discharge. 

Does the debtor have the right to a discharge or can creditors object to the discharge?

In Chapter 7 bankruptcy cases, the debtor does not have an absolute right to a discharge. An objection to the debtor's discharge may be filed by a creditor, by the trustee in the case, or by the U.S. trustee. Creditors receive a notice shortly after the case is filed that sets forth much important information, including the deadline for objecting to the discharge. To object to the debtor's discharge, a creditor must file a complaint in the bankruptcy court before the deadline set out in the notice. Filing a complaint starts a lawsuit referred to in bankruptcy as an "adversary proceeding."
 
The court may deny a Chapter 7 discharge for any of the reasons described in § 727(a) of the Bankruptcy Code, including failure to provide requested tax documents; failure to complete a course on personal financial management; transfer or concealment of property with intent to hinder, delay, or defraud creditors; destruction or concealment of books or records; perjury and other fraudulent acts; failure to account for the loss of assets; violation of a court order or an earlier discharge in an earlier case commenced within certain time frames (discussed below) before the date the petition was filed. If the issue of the debtor's right to a discharge goes to trial, the objecting party has the burden of proving all the facts essential to the objection.
 
In a Chapter 13 bankruptcy case, the debtor is usually entitled to a discharge upon completion of all payments under the Chapter 13 Plan. As in Chapter 7, however, discharge may not occur in a Chapter 13 bankruptcy case if the debtor fails to complete a required course on personal financial management.
 
A debtor is also ineligible for a discharge in a Chapter 13 bankruptcy case if he or she received a prior discharge in another case commenced within time frames discussed the next paragraph. Unlike a Chapter 7 bankruptcy case, creditors do not have standing to object to the discharge of a Chapter 13 debtor. Creditors can object to confirmation of the Chapter 13 Plan, but cannot object to the discharge if the debtor has completed making plan payments.

Can a debtor receive a second discharge in a later Chapter 7 bankruptcy case?

The court will deny a discharge in a later Chapter 7 bankruptcy case if the debtor received a discharge under Chapter 7 or Chapter 11 in a case filed within 8 years before the second petition is filed.
 
The court will also deny a Chapter 7 discharge if the debtor previously received a discharge in a Chapter 13 case filed within 6 years before the date of the filing of the second case unless (x) the debtor paid all "allowed unsecured" claims in the earlier case in full, or (y) the debtor made payments under the plan in the earlier case totaling at least 70% of the allowed unsecured claims and the debtor's plan was proposed in good faith and the payments represented the debtor's best effort.
 
A debtor is ineligible for discharge under Chapter 13 if he or she received a prior discharge in a Chapter 7 or a Chapter 11 bankruptcy case filed 4 years before the current case or in a Chapter 13 bankruptcy case filed 2 years before the current case.

Can the discharge be revoked?

The court may revoke a discharge under certain circumstances. For example, a trustee, creditor, or the U.S. trustee may request that the court revoke the debtor's discharge in a Chapter 7 bankruptcy case based on allegations that the debtor: obtained the discharge fraudulently; failed to disclose the fact that he or she acquired or became entitled to acquire property that would constitute property of the bankruptcy estate; committed one of several acts of impropriety described in § 727(a)(6) of the Bankruptcy Code; or failed to explain any misstatements discovered in an audit of the case or fails to provide documents or information requested in an audit of the case. Typically, a request to revoke the debtor's discharge must be filed within one year of the discharge or, in some cases, before the date that the case is closed. The court will decide whether such allegations are true and, if so, whether to revoke the discharge.
 
In Chapter 11 or Chapter 13 bankruptcy cases, if confirmation of a plan or the discharge is obtained through fraud, the court can revoke the order of confirmation or discharge.

May the debtor pay a discharged debt after the bankruptcy case has been concluded?

A debtor who has received a discharge may voluntarily repay any discharged debt. A debtor may repay a discharged debt even though it can no longer be legally enforced. Sometimes a debtor agrees to repay a debt because it is owed to a family member or because it represents an obligation to an individual for whom the debtor's reputation is important, such as a family doctor.

What can the debtor do if a creditor attempts to collect a discharged debt after the case has concluded?

If a creditor attempts collection efforts on a discharged debt, the debtor can file a motion with the court, reporting the action and asking that the case be reopened to address the matter. The bankruptcy court will often do so to ensure that the discharge is not violated. The discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including the filing of a lawsuit, designed to collect a discharged debt. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine.

May an employer terminate a debtor's employment solely because the person was a debtor or failed to pay a discharged debt?

The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case. The law prohibits the following forms of governmental discrimination: terminating an employee; discriminating with respect to hiring; or denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.

How can the debtor obtain another copy of the Discharge Order?

If the debtor loses or misplaces the discharge order, another copy can be obtained by contacting the clerk of the bankruptcy court that entered the order. The clerk will charge a fee for searching the court records and there will be additional fees for making and certifying copies. If the case has been closed and archived there will also be a retrieval fee, and obtaining the copy will take longer.
 
The discharge order may be available electronically. The PACER (Public Access to Court Electronic Records) system provides the public with electronic access to selected case information through a personal computer located in many clerk's offices. The debtor can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically.

How will my credit score be affected by filing for bankruptcy?

Perhaps the biggest issue that discourages people from filing bankruptcy is the effect it has on their credit.  A Chapter 7 bankruptcy case will remain on your credit report for up to ten years.  A Chapter 13 bankruptcy case will appear on your credit report for up to 7 years.  However, it is important to note that if you already have a history of financial delinquency, failure to make timely payments, defaulting accounts, collections or a large debt to asset ratio, those are all factors which are today negatively impacting your credit. 
 
If you are facing the burden of overwhelming debt or financial hardship and struggling with financial difficulties, bankruptcy can afford you the opportunity to make a fresh start, reducing your overall debt so that you can regain control of your finances and following the path toward financial freedom.  Over time, the impact and significance of a bankruptcy will lessen.  Upon emerging from bankruptcy, if you manage your debts well, paying your bills on time, such as your mortgage payments, and check your credit reports regularly to ensure that the accounts are being reported accurately, over time your credit score will gradually improve. 
 
While the effect of bankruptcy on your credit is absolute, the consequences of not filing when you’re unable to make payments could result in one or more of your accounts being reported as delinquent or charge off accounts.  Additionally, the accounts could be assigned to a collection agency resulting in a second derogatory account appearing on your credit.  Should the creditor decide to sue you, the lawsuit could become a judgment thus appearing on your credit report for a period of 10 years, which is no less than a bankruptcy.  However, a bankruptcy offers a fresh financial start whereas a judgment represents debt owed.

Who will find out if I decide to file for bankruptcy?

Bankruptcy filings, like most court filings, are public record. Bankruptcy records specifically are accessible the PACER system which provides the public with electronic access to selected case information through a personal computer. A debtor can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically. However, customarily, no one will know you went bankrupt and generally people and businesses do not have any familiarity with the PACER system.

Will my employer know I filed for bankruptcy?

The short answer is maybe. If you file a Chapter 7 bankruptcy case, your employer will not be notified by us or the bankruptcy court of your filing. However, in a Chapter 13 bankruptcy case your paycheck will be garnished to make plan payments to your creditors (through your trustee), thus your employer would be notified of the garnishment (similar to a wage garnishment for a judgement, tax lien or child support) to deduct your required monthly plan payment from your paycheck. Generally, in large companies, this is going to be sent to headquarters or the primary HR office, thus, your day-to-day supervisor will not necessarily have knowledge.

What about my family, friends and colleagues, will they know I filed for bankruptcy?

Bankruptcy filings, like most court filings, are public record. Bankruptcy records specifically are accessible the PACER system which provides the public with electronic access to selected case information through a personal computer. A debtor can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically. However, customarily, no one will know you went bankrupt and generally people and businesses do not have any familiarity with the PACER system.

Will my creditors stop calling me if I file for bankruptcy?

Once a creditor or bill collector is made aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After the bankruptcy petition is filed, the court mails a notice to all creditors listed in your bankruptcy schedules. If your creditors continue their collection efforts after the bankruptcy petition filing, you should refer them to your retained attorney Tran Singh LLP.

What is a 341 Meeting?

Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held at the offices of the U.S. trustee.  This meeting is informally called a "341 Meeting" because § 341 of the Bankruptcy Code requires that the debtor attend this meeting and be questioned under oath about his or her financial affairs. Your local, Houston bankruptcy attorneys at Tran Singh LLP will be present with you in the meeting. You must attend the first 341 Meeting or your case may be dismissed. If you are married and filing jointly, you and your spouse must both attend the 341 Meeting.

What is an objection hearing?

An objection hearing occurs when a creditor objects to your case. You will be required to attend the hearing. If you fail to attend the objection hearing, it could result in your case being dismissed, or other adverse consequences.

Will I lose everything?

Absolutely not. The law permits you to protect your exempt assets so that you do not lose them. Therefore, property that is exempt is legally beyond the reach of creditors and the bankruptcy trustee.  Generally, this includes your home, your household furnishings, the vehicles that you and your family members drive, the tools of your trade and your retirement accounts. However, every situation is unique and we encourage you to contact your local, Houston bankruptcy attorneys at Tran Singh LLP today at (832) 975-7300 or complete our Initial Consultation Form and rest assured one of our dedicated attorneys will contact you to go over the details of your unique situation.

What is the cost to file a bankruptcy case?

The current bankruptcy court filing fees are as follows:

• Chapter 7 Bankruptcy:     $335.00 ($245.00 Court Filing Fee | $15.00 Trustee Fee | $75.00 Administrative Fee)
• Chapter 11 Bankruptcy:   $1,717.00 ($1,167.00 Court Filing Fee | $550.00 Administrative Fee)
• Chapter 13 Bankruptcy:   $310.00 ($235.00 Court Filing Fee | $75.00 Administrative Fee)

These fees are paid to the clerk of the bankruptcy court and Tran Singh LLP does not keep any portion of the filing fee. 

For cases filed by individuals (not businesses) the payment of the filing fee can be deferred by requesting that the court permit the filing fee to be paid in installments. However, the number of installments cannot exceed 4 and the final installment must be paid not later than 120 days after filing the bankruptcy petition.

If I have filed a Chapter 13 bankruptcy case, how do I make my payments?

If you are a wage or salary employee, a wage order will be filed with the court to automatically deduct your monthly Chapter 13 Plan payments from your paycheck and sent direct to your Chapter 13 Trustee. You are responsible for making the payments directly to your Chapter 13 Trustee if your employer for any reason fails to withhold the proper amount of your Chapter 13 Plan payment.

If you are not a wage or salary employee, you will have to make payments directly to your Chapter 13 Trustee, either by authorizing an automatic deduction through an electronic funds transfer or agreement for automatic debit origination.

What if I don't see my Chapter 13 Plan payments being deducted from my payroll?

In a Chapter 13 bankruptcy case, it is your obligation to make sure that plan payments are made in a timely manner even if you are on a wage order or otherwise arranged for automatic deductions. Your first payment is due 30 days from the date of filing your Chapter 13 bankruptcy petition. If your wage order or automatic deduction is not pulled by the date your first plan payment is due, it is your responsibility to arrange for the plan payment to be paid either by calling Tran Singh LLP to arrange for a manual payment, or by making a direct payment to your Chapter 13 Trustee. 

To make a payment directly, click on the link below for your assigned Chapter 13 Trustee:

David G. Peake
Tiffany D. Castro

If I previously filed a bankruptcy case, am I eligible to receive a discharge in a new bankruptcy case?

If you previously obtained a discharge in a Chapter _____,	You must wait _____ . . .  ​	Before you are eligible for a discharge in a Chapter _____.	See Bankruptcy Code Section _____
7, 11	​8 years	Chapter 7	§727(a)(8)
12, 13	6 years	Chapter 7	§727(a)(9)
7, 11, 12	4 years	Chapter 13	§1328(f)
13	2 years	Chapter 13	§1328(f)

• Please note that for all calculations concerning eligible discharge, please contact your local, Houston bankruptcy attorneys at Tran Singh LLP.
• Eligibility can be determined from commencement of the date of the first case to commencement of the date of the second. It is not determined based on discharge or conversion dates.
• Whether a debtor is eligible for discharge in a Chapter 7 after filing a Chapter 12 or Chapter 13 case OR eligible for discharge in a Chapter 13 case after filing a previous Chapter 13 case is based not only on the time period between filings but on other factors such as the percentage the plan paid to unsecured creditors and whether the plan was proposed in good faith.