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Frequently Asked Questions

Answers from John E. Smith & Associates

Facing debt is never an easy time and decisions regarding bankruptcy should be made with the help of an experienced and dedicated attorney. At John E. Smith & Associates, our lawyer has more than 35 years of experience and has been recognized as a Certified as a Specialist in Consumer Bankruptcy Law by Texas Board of Legal Specialization since 1989.

Read answers to some frequently asked questions below then call our firm at (281) 954-3161 to discuss your unique situation.

  • What is bankruptcy?

    The bankruptcy process allows individuals and businesses facing debt protection from creditors. Individuals may qualify for either Chapter 7, when there is no extra income and debts can be discharged by liquidating non-exempt assets, or a reorganization bankruptcy, such as Chapter 13. During a reorganization, debt is restructured in accordance with an approved plan and gradual payments can be made to pay them back.

  • Am I in danger of losing my home?

    In the State of Texas, homesteads are protected from many creditors when debtors are able to keep us with their mortgage payments, even during a bankruptcy. Not all homes are considered homesteads, however, and it is an important distinction to make before you decide to file for bankruptcy. If, for example, you purchased the homestead recently (within 1,215 days), it may not be protected.

  • What if I owe money to the IRS?

    The Internal Revenue Service is not exempt from the automatic stay written in the Bankruptcy Code. Back taxes may be restructured and a payment plan for up to 60 months can be follow to pay back what you owe. Sometimes back taxes that are over three years old can be discharged completely with a bankruptcy. Our Galveston County bankruptcy attorney can explain your tax liability before you file.

  • Will my business continue to operate if I file for bankruptcy?

    In many situation, yes, your business will continue to operate as usual while you are going through a bankruptcy proceeding, especially during Chapter 13. You will, however, be restricted in terms of how money is being spent and you will need to report business activities to the Bankruptcy Court.

  • Can I file for bankruptcy without an attorney?

    No, as the law allows debtors to represent themselves. However, it is in your best interest to hire a lawyer as the process can be complicated and requirements are strict. In addition, paralegals and typing services are legally not allowed to advise you or stand with you in court. This can lead to lost assets, denied discharges, and even criminal charges filed against you.

  • What happens to my credit after bankruptcy?

    You will notice that credit card solicitations come in within months after filing and home and vehicle loans are available within two years. These, however, come with higher interest rates and larger down payments.

  • Is bankruptcy expensive?

    Consumer bankruptcy is actually one of the least expensive legal matters you can go through. Chapter 7 usually costs around $2,000, and Chapter 13, on average, costs about $3,500. Litigation and business bankruptcies are typically higher.

  • Will I have to go to court?

    In a Chapter 7 or 13 case, only one trip to Federal Court is generally needed.

  • Will bankruptcy stop foreclosure proceedings?

    Automatic stay applies to foreclosure as well as repossession and creditor actions. Bankruptcy needs to be filed before the foreclosure sale, which is the first Tuesday of every month. In a Chapter 13 case, the debtor needs to be able to repay their mortgage payments, which can be directly deducted from your paycheck with a Wage Order.

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