Job losses, medical expenses and other sources of economic hardships might not stop creditors from calling Texas debtors to seek payment. Without a viable means to pay off the debt, a debtor might look at bankruptcy protection. While heading into bankruptcy court may appear daunting, the process might be more straightforward than debtors realize.
Filing for bankruptcy protection
Bankruptcy filers could seek protection under Chapter 7 liquidation or through the Chapter 13 payment plan option. Either way, specific actions occur once someone enters into bankruptcy. Among the first results is a stay on collections. That means creditors may no longer call or harass debtors for money.
Shortly after filing, the Department of Justice assigns a trustee to the debtor’s case. Although the bankruptcy judge has the final say on all decisions, the trustee reviews all documents and could request additional information.
Debtors can expect the bankruptcy filing to have an immediate effect on their credit score. A significant decrease might occur, but things should improve when the debtor starts rebuilding his or her financial situation.
Moving forward with bankruptcy
A “meeting of creditors” occurs not long after filing although the meeting’s name is not entirely accurate. The debtor must attend this meeting with the trustee, but the creditors are under no such requirements. The bankruptcy process moves along whether they attend or not. During the meeting, the debtor answers questions under oath regarding financial problems, assets, debts and so on.
Filers should understand that not responding to the trustee’s request for documentation could lead to dismissal. Upon bankruptcy protection dismissals, collection action becomes likely to resume. For this reason, it’s important to follow legal guidance throughout the process.