Many people considering filing for bankruptcy are unfamiliar with the multiple "types" available for personal filers. More people filing for personal bankruptcy in Texas will fall into the category of Chapter 7 or Chapter 13 bankruptcy. It is a good idea for individuals thoroughly understand both types to pick the right option for their particular situation.
The main difference between Chapter 7 and Chapter 13 bankruptcy is whether debts are completely dischargeable. In Chapter 7, a debtor can eliminate all unsecured debt, whereas payments can still be made with Chapter 13. Understandably, someone will need to be in a more dire situation and prove that he or she will not be able to earn enough to keep up with debts for Chapter 7 to be an option.
If a person files for Chapter 7 bankruptcy, it can be converted to Chapter 13 later on if the filer meets certain conditions. For example, if the individual files for Chapter 7 because he or she does not have a job, the filer may obtain one and be more capable of paying off some debts. Whether a person can earn wages is a key consideration in whether Chapter 13 bankruptcy is an option.
Those who do have this option may find this to be preferable, as it is possible to keep nonexempt personal property with Chapter 13 bankruptcy. Chapter 13 bankruptcy also remains on a credit report for seven years, where as Chapter 7 is visible on the report for 10 years. Those who are considering personal bankruptcy in Texas should speak with a lawyer in the state who practices in this area of the law.