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Businesses considering bankruptcy get intense legal advice before filing. You would also be smart to get solid advice to make a good decision.


What Businesses Do Before Filing Bankruptcy

The following are just a few of the companies which have filed business bankruptcy in the last couple months:

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Bankruptcy gives you protection from your homeowners’ association. Chapter 7 may be enough, but Chapter 13 buys much more time.

Filing bankruptcy gives you limited, but potentially very useful protection from your homeowners’ association liens and debts. A Chapter 13 “adjustment of debts” filing could especially help.

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Chapter 13 can be a highly advantageous way to protect your home equity if that equity is larger than your homestead exemption amount.

The Problem of Too Much Home Equity

Our last two blog posts were about protecting the equity in your home through the homestead exemption. Two weeks ago was about protecting the current equity; last week about protecting future equity. The blog post about protecting current equity assumed that the amount of equity in your home is no more than the amount of your applicable homestead exemption. For example, if your home is worth $300,000, your mortgage is $270,000, that gives you $30,000 of equity. If your homestead exemption is $30,000 or more that equity would be protected in a Chapter 7 bankruptcy case.

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Protecting present home equity is a sensible focus when considering bankruptcy. Protecting future potential equity can be even more important.

Our last blog posts discussed how to protect the equity currently in your home through the homestead exemption. We discussed property exemptions in bankruptcy in general, and federal and state homestead exemptions in particular. Overall we showed how your homestead exemption can preserve the equity you presently have through a Chapter 7 case.

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TX bankruptcy attorney, Texas bankruptcy lawyer Many people believe that being married means you automatically take on your partner’s debt. While it is true that assets you accrue during the marriage can be considered joint assets, that is not always the case for debts. You will only be legally responsible for your spouse’s debts if both of your names were used when you incurred the debt. It is not uncommon for only one spouse in a marriage to file for bankruptcy individually. Many of these single-spouse situations happen when a couple is married and one spouse has debt that they are having trouble repaying. For some couples, a major concern is whether or not they should file for bankruptcy jointly or separately.

Community Property and Community Debts

Before you decide if you will be filing for bankruptcy separately or with your spouse, it is important to look at the entire situation. Texas is a community property state, meaning that most of the property that was acquired during the marriage is jointly owned, or belongs to the “community,” which is you and your spouse. Because of this, even if just one spouse files for bankruptcy, all of the community property becomes part of the bankruptcy estate.

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