Texas Business Bankruptcy Attorney

Bankruptcy can be one of the most difficult times in a business owner’s life. Filing for bankruptcy in Texas can feel like you’ve made a permanent mistake and ruined your business and career. This doesn’t have to be the case. With an experienced bankruptcy attorney in Dallas on your side, you can take the necessary steps to safeguard your future and protect your business.

At M. J. Watson & Associates, P.C., I understand just how hard you worked to build your business. I did it myself with my Texas bankruptcy law firm. You’ve poured your heart and soul into your company and should not have to lose everything just because you’ve fallen on hard financial times. By knowing your rights and the steps you can take after you’ve decided to file for bankruptcy, you can recover from this moment to build a better and stronger future.

As a member of the Dallas community, I want to stand by your side no matter the situation or size of your business.  At M. J. Watson & Associates, P.C., we help businesses of all shapes and sizes including:

  • Family owned businesses
  • Limited liability companies (LLCs)
  • Corporations
  • Partnerships
  • Sole proprietorships
  • Closely held businesses
  • Other small businesses

If you have already decided to file for bankruptcy or if you’re just beginning to look into it as an option, we can help guide you to the solution that’s right for you and your business.

Chapter 7 Bankruptcy 

Chapter 7 bankruptcy provides Texas debtors with the chance to pay off their debt by liquidating their assets. Also known as, liquidation bankruptcy, Chapter 7 bankruptcy offers immediate and fast acting relief to stave off the worse parts of bankruptcy. Depending on the size and value of the assets, Chapter 7 bankruptcy can provide debtors with a financial fresh start and can be used by any size business, from small, family-owned shops to national corporations.

Chapter 7 bankruptcies immediately halt all debt collection efforts, and all eligible debts will be eliminated, ensuring that the company has no future payment obligations.  While liquidation itself is generally orderly and managed by a bankruptcy trustee, the process of filing for Chapter 7 bankruptcy and figuring out which assets can be used to pay off debts can be extremely complex and overwhelming.

Though Chapter 7 bankruptcy can be a lifesaver for those companies that are drowning in debt, it does require that you permanently close your business.  Such a huge step should never be taken lightly, and you should consult with a Texas Chapter 7 bankruptcy attorney before deciding what to do.

I’m a Texas attorney who focuses on business bankruptcies.  I can guide you through the complex process and ensure your debts are paid so you can move on with your life.

Chapter 11 Bankruptcy

Debt doesn’t need to be the end of your business and neither does a bankruptcy. Chapter 11 bankruptcies offer a way to both pay off your debts and to ensure the survival of your business. You have worked hard to build your business and shouldn’t be forced to close it permanently because you’ve fallen on some financial difficulties.

As a business owner myself, I understand what it means to build your own business from the ground up, putting your time and energy into it. If you’re considering filing for Chapter 11 bankruptcy, the bankruptcy attorney at M. J. Watson & Associates, P.C. is here to help.

A Chapter 11 bankruptcy allows the business to design and propose a repayment plan that clearly outlines when and how the debt will be repaid. Also known as reorganization bankruptcy, Chapter 11 bankruptcy gives Dallas business owners the opportunity to keep their business open while still paying off their financial obligations.

As soon as you file for Chapter 11 bankruptcy, an automatic stay is placed on your debt collections, giving you a well-deserved and needed break from the strains of day-to-day collection calls and notices. With the help of an experienced Dallas Chapter 11 bankruptcy attorney, you can begin planning your next move and designing a repayment plan that best suits your needs and obligations. Unlike with Chapter 7 bankruptcy where you’re forced to shut down your business, your company can stay open and operating as you work through Chapter 11 bankruptcy.

Creditors’ Rights during Bankruptcy

When a business files bankruptcy, the proceedings can leave creditors unsure of when or if their debts will be repaid. Bankruptcy filings often limit the amount a Texas creditor can receive and how they can go about collecting the debt. Creditors’ rights under the U.S. Bankruptcy Code  are protected regardless of whether the debtor has filed bankruptcy.

As a Texas creditors’ rights attorney, I understand how frustrating it can be when one of your debtors files for bankruptcy in Dallas. I’ve represented vendors, creditors, and financial institutions across Texas to ensure their debt collection efforts are successful. Whether you’re restructuring your debt, negotiating a new payment plan, or litigating with or without the use of a bankruptcy court, my years of experience as a Dallas bankruptcy attorney can help you secure the settlement you deserve.

The legal services I offer creditors include:

  • Garnishment proceedings
  • Collection actions
  • Involuntary bankruptcy proceedings
  • Negotiating cash offers
  • Challenging automatic stays
  • Filing claims in bankruptcy court
  • Requesting reaffirmation of debt
  • Challenging a discharge of debt

Your debtor’s bankruptcy should never prevent you from receiving what you were promised. If bankruptcy is not involved in your case, then your debtor has absolutely no excuse to not pay you what you’re owed. With a creditors’ rights attorney from M. J. Watson & Associates, P.C., you can rest easy knowing your rights are being aggressively and professionally defended.

What is Bankruptcy?

Bankruptcy is a loaded word for most business owners. It comes with its own negative connotations, and many Texas business owners associate it with failure and the end of their company. This perspective is misleading and can direct many business leaders away from a solution that’s actually right for them and their needs.

In truth, bankruptcy offers a fresh financial start to businesses that are not able to pay their bills. Federal law protects your right to file for bankruptcy, and filing for bankruptcy in Texas immediately stops your creditors from seeking payment. Bankruptcy can provide a reprieve to business owners who are overwhelmed by the constant barrage of creditor emails and phone calls, giving them much needed time to breathe.

If your business is lagging under the weight of collectors and financial debt, filing for bankruptcy may be the best solution.

Who Can File for Bankruptcy?

Anyone with so much debt that they can’t feasibly repay it can file for bankruptcy. There is no minimum restriction on how much debt is required to file for bankruptcy in Texas as each situation is unique and everyone will have a different perspective on how much debt is overwhelming.

However, bankruptcy cannot be used to defraud your creditor and get out of paying for debts you could manage. Bankruptcy is intended to offer individuals as well as companies in Texas a way out of a financial obligation that has become overbearing.

In addition, there are time restraints after filing for a specific type of bankruptcy that state when you can file for bankruptcy again. For example, if you filed for Chapter 7 bankruptcy, you cannot file for bankruptcy again for at least seven years.

Can I Declare Bankruptcy Even When I Have a High-Paying Job?

Employed people can and do file for bankruptcy in Dallas and across Texas. Your employment status does not restrict your ability to file for bankruptcy but it can restrict the type of bankruptcy you can file for. Your income can often determine if you are able to file for Chapter 7 or Chapter 11 bankruptcy.

A two-part test that is called the means test determines what type of bankruptcy you may qualify for. The first part of the means test examines your family income. If this income is below the median income of a similarly sized family in Texas, then you can file for Chapter 7 bankruptcy.

If your income exceeds that limit, the second part of the means test uses your income, expenses, and secured debt payments to determine if you have enough disposable income to qualify for Chapter 11 bankruptcy.

No matter your income or job, you have a federal right to file for bankruptcy if you’re not able to pay your debts. An experienced bankruptcy attorney in Dallas can guide you through determining which type of bankruptcy you qualify for.

How Does Filing for Bankruptcy Help?

Debt can quickly become an overwhelming and all-encompassing focal point for any business owner. The pressure to pay back financial obligations can overwhelm your life, your family, and your company. Filing for bankruptcy in Texas can offer relief from these stresses and give you time to focus on a path forward. While bankruptcy should not be considered lightly, it can be the way to start fresh and rebuild your life away from the constant buzz of creditors.

What are the Benefits of Declaring Bankruptcy?

Filing for bankruptcy can be a blessing to some business owners. When they are unable to pay off their debts, declaring bankruptcy provides them with the option to restrict their debt obligation and develop a plan to move forward. Some advantages to filing for bankruptcy include:

  • Triggering an Automatic Stay which prevents creditors from trying to collect their debts or repossessing the debtor’s property. An automatic stay will also stop the creditor from constantly contacting you through emails, phone calls, and letters. Evictions, foreclosures, wage garnishments, and utility shutoffs are also stopped and the creditors are not able to sue you during this time.
  • An Ability to Discharge Your Debt Obligation for dischargeable debts.
  • Bankruptcy Exemptions can safeguard debtors from losing any of their property.
  • Improved Credit Rating by discharging debts during bankruptcy.
  • Long-Term Financial Sustainability can be easier to achieve when the debtor cannot rely on credit cards or loans.
  • Credit Counseling can help debtors learn how to manage their money and prevent future financial trouble.

How to File for Bankruptcy in Texas

There are several stages of filing for bankruptcy in Dallas. No matter where you are in the process, you should consult with the licensed and experienced bankruptcy attorney from M. J. Watson & Associates, P.C. to ensure that you’re receiving the best help possible.

  • Assess Your Financial Situation: filing for bankruptcy might be the best option for you and your business, but that is not always the case. What may seem like an insurmountable situation might only require some clever adjustment of finances. After you have consulted with a bankruptcy law firm and it is determined that it’s in your best interest to declare bankruptcy, your next step will be to take the means test.
  • Take the Means Test: the means test will determine what kind of bankruptcy you are able to file for. It will also help your bankruptcy attorney determine what assets you have and how best to defend your case to the creditors and the bankruptcy court.
  • File Your Bankruptcy Petition: After determining what kind of bankruptcy you qualify for, your bankruptcy attorney can collect the paperwork and files you need to successfully file your bankruptcy. From there, your bankruptcy attorney will negotiate with your creditors on your behalf to ensure the best financial future possible for your company.

Bankruptcy Laws in Texas

As filing for bankruptcy is a federal case, Texas bankruptcy laws are similar to those found across the country. The biggest difference involves exemptions to your bankruptcy filing. Depending on your situation, you can use Texas exemptions or federal exemption statutes.

Texas Bankruptcy Exemptions

In a bankruptcy filing, exemptions are items that are protected from creditors and cannot be seized to repay your debt.

Texas Exemptions Include:

  • Personal Property such as home furnishings, family heirlooms, motor vehicles, cattle and other forms of livestock, pets, and athletic and sporting equipment,
  • Insurance including life insurance, Texas employee uniform group insurance, Texas state college or university employee benefits
  • Public Benefits such as unemployment or workers compensation
  • Pensions of law enforcement officers, teachers, state employees, and municipal employees
  • Tools of Trade including farming or ranching vehicles and specialized tools, equipment, or books
  • Wages that were earned but unpaid and unpaid commissions to 75%

Federal exemptions can be used to supplement Texas exemptions. Some federal exemptions cover:

  • Retirement Benefits such as social security and veteran benefits
  • Death & Disability Benefits
  • Deposits in the savings accounts of permanent duty military members
  • Railroad workers’ unemployment insurance
  • Seamen’s wages while at sea

The rules governing which exemptions you can and cannot apply for can be nuanced and complicated. At M. J. Watson & Associates, P.C., we want what’s best for our clients which includes protecting their property, wages, and benefits from collectors as they file for bankruptcy.

What Happens When You File for Bankruptcy?

The first thing that will happen when you file bankruptcy is that a stay will be placed on your debt. This automatic stay prevents creditors from continuing to contact you about the debt and can offer you a chance to coordinate with your bankruptcy team about what to do next.

From there, your path forward depends on what kind of bankruptcy you file. Under Chapter 7 bankruptcy, your assets will be fully liquidated which means you and your lawyer will need to determine the value of your assets and how best to apply them to your debt.

If you file Chapter 11 bankruptcy, you will design a plan to repay your debt. This plan should be built in conjunction with both your Texas bankruptcy lawyer and your creditors. Depending on your income and financial situation, this payment plan can extend for several years so it’s crucial that you have a complete understanding of the payment plan you’re agreeing to. When you hire the Dallas bankruptcy lawyer from M. J. Watson & Associates, P.C., you can rest easy knowing we are defending your rights and ensuring you receive the best agreement possible.

How much does it Cost to File for Bankruptcy?

The cost of filing for bankruptcy in Texas depends on the type of bankruptcy you’re filing for. The filing fee for bankruptcy under Chapter 7 is $335.00 whereas the filing fee for bankruptcy under Chapter 11 (non-railroad) generally costs $1,717.00. If you are not able to pay for the cost of filing in a single payment, the court can set up a system of payment installments instead.

These fees also don’t include the cost of hiring an attorney to help you file for bankruptcy. While each case is unique and will require the help of your bankruptcy lawyer.  It’s never in your best interest to file on your own. Your creditors want to be paid the money they’re owed, and without an experienced bankruptcy attorney, you may end up in an even direr financial situation.

What Doesn’t Bankruptcy Do?

Declaring bankruptcy can be a lifesaver for many business owners, but it does not solve every problem. There are certain things that aren’t covered or remedied by a bankruptcy.

A bankruptcy cannot do the following:

  • Eliminate Specific Rights of Secured Creditors: A secured creditor is one that, as collateral for the loan, took a mortgage or other lien on the property. Car loans and home mortgages are particularly common items for secured creditors. While you can force secured creditors to accept payments and the bank may eliminate a requirement to continue paying if your property is seized, you usually are not able to keep the collateral unless you continue paying the debt.
  • Discharge Certain Types of Debts: Debts singled out by the bankruptcy laws for special treatment cannot be discharged. These typically include child support, student loans, alimony, criminal fines, and some taxes.
  • Protect Co-signers on Your Debts: While you may be able to escape some of the financial burden by discharging the debt, your co-signers will likely have to repay all or part of the loan. Before you discharge the debt, you should speak with your attorney to ensure you and your co-signer understands what this step means.

What Debts Remain Even After Bankruptcy?

Not all debts and financial obligations are covered under bankruptcy.

Debts that are not covered by filing for bankruptcy in Texas include:

  • Child support
  • Alimony payments
  • Student loan debts
  • Tax debts
  • Debts that weren’t listed in your bankruptcy papers
  • Personal injury debts
  • DUI wrongful death debts
  • Penalties and fines from traffic tickets and criminal restitution
  • Some fraud-related debts

Does Bankruptcy Stop Foreclosures or Evictions?

Filing for bankruptcy can prevent you from being evicted and can delay or even prevent foreclosure. Chapter 7 bankruptcies can delay foreclosure for a period of several months where as Chapter 11 bankruptcy may be able to prevent it altogether and save your home. Before determining if filing for bankruptcy will stop an eviction notice, you should contact your Dallas bankruptcy legal team first.

Understanding the Texas Homestead Exemption

Under Texas law homeowners have a way to protect the value of their home during bankruptcy. The Texas homestead exemption allows homeowners to exempt the entire value of their home from the bankruptcy filings.

Some acreage limits do apply.

  • For Urban Homes in a City, Town, or Village, the property cannot exceed 10 acres.
  • For Rural Homes, the property cannot exceed 100 acres unless it’s occupied by a family.
  • Rural Homes Occupied by a Family cannot exceed 200 acres

Not everyone is able to apply the homestead exemption to their bankruptcy case. To be able to apply it, you must have purchased and owned the property for at least 1,215 days for it to be applicable.

How Bankruptcy Affects Your Child Support Obligations

Filing for bankruptcy does not eliminate your requirement to pay child support. It also does not exempt you from paying any missed child support payments, but a repayment plan formed under Chapter 11 bankruptcy can help you to meet these financial obligations.

Student Loan Debt in Bankruptcy

Student loan debt can be covered in a bankruptcy but only if it’s shown that the debt places an undue hardship on the debtor. Proving an undue hardship in a bankruptcy case is extremely difficult though not impossible.

What Happens To Life Insurance During Bankruptcy?

Term life insurance, which does not mature until after your death, does not have a value while you’re alive and thus can’t be included as an asset in a bankruptcy case.

Whole life insurance does have a cash value and is considered a personal asset. Bankruptcy exemptions can protect all or some of your whole life insurance policy and you should speak with a bankruptcy attorney at M. J. Watson & Associates, P.C. to determine how the exemptions apply to your specific situation.

Will I Lose All My Property If I File Bankruptcy in Texas?

The fate of your property depends on what kind of bankruptcy you file and the exemptions that apply to your case. There are 3 types of property in a Texas bankruptcy case: exempt, nonexempt, and jointly-owned.

  • Exempt Property is protected under Texas or federal bankruptcy exemptions. Texas residents can decided which list of exemptions they would like to use in their situation.
  • Non-exempt Property is not protected under the exemption list. Under Chapter 7 bankruptcy, this property will be sold to pay off your debt. Those who file under Chapter 11 bankruptcy can keep their nonexempt property, but the value of the property will be included in the monthly payment plan.
  • Jointly-Owned Property can be used by spouses filing a joint bankruptcy to double the exemption amount, but only if they both own the property. If the property is owned by only one spouse, the exemption amount cannot be doubled.

If you are contemplating filing for bankruptcy for your company in Texas, it is imperative that you seek the legal guidance of an attorney who has the knowledge of Texas bankruptcy laws and skills required to ensure that you make the best possible decision regarding the future of your business.  Contact M. J. Watson & Associates, P.C. today to speak with the bankruptcy lawyer and set up a free consultation to discuss your financial situation today at 214-965-8240.

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