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Texas energy company likely to file for bankruptcy

Bankruptcy is an option afforded to American citizens who are in need of debt relief. A number of different factors can lead to insurmountable debt, and many of them are events that people do not see coming or cannot prevent. Events such as sudden employment termination or a major medical procedure can exacerbate debts and cause them to grow rapidly, making debt relief through bankruptcy the best available option. Large amounts of accrued debt can happen to anyone, even multibillion-dollar companies.

Energy Future Holdings, one of the top 20 power generators in the country, and the largest in Texas, is projected to file for bankruptcy soon. Facing more than $40 billion in debt, a bankruptcy filing by the energy company would make the top 10 largest filings in U.S. history. EFH’s problems began long ago when it was bought out in 2007 and saddled with a near $40 billion in debt. The following years were not kind to the power company, as the economy fell into a recession and power prices decreased, making it even harder for EFH to pay off the debt.

Should EFH file for Chapter 11 bankruptcy, it is likely that the company’s businesses would be divided and distributed to its various creditors. Chapter 11 bankruptcy is only one form of debt relief available, and is generally used by businesses. Other options for personal bankruptcy include Chapter 7 bankruptcy and Chapter 13 bankruptcy. Each bankruptcy option is different, and it is important to choose the right option when filing for your specific problems.

Chapter 7 bankruptcy is a common form of debt relief that allows filers to discharge many types of debt completely. Chapter 13 bankruptcy is a form of bankruptcy in which a debt repayment plan is made to let the filer repay their debts over a three- to five-year period. So many debt relief options might seem overwhelming, but effective legal counsel can help you choose the debt relief option that is right for you.

Source: Reuters, “Top Texas energy company on verge of bankruptcy,” Nick Brown and Bill Cheung, March 28, 2014

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