Chapter 7 bankruptcy and carve-out agreements

Many Texans struggle with debt levels that have become simply unmanageable. When people are struggling, they may also be facing foreclosure actions in addition to being unable to pay their unsecured debts. This combination of factors may lead them to consider filing Chapter 7 bankruptcy.

Chapter 7 bankruptcy may be a good option for people who need relief from their unsecured debts. The chapter may not be appropriate for those who are going through foreclosure, however. When a bankruptcy petition is filed, an automatic stay is issued by the bankruptcy court, which directs all creditors to cease any collection activity during the bankruptcy proceeding. Creditors may apply for relief from the bankruptcy court through the trustee.

Some mortgage lenders may ask for relief through a carve-out. This is an option in which the lender will ask that the trustee liquidates the property that secures its interest. In exchange, the lender agrees that the trustee can use a portion of the proceeds netted from the sale to pay some of the unsecured creditors as well. While this may not be an option that a particular lender might take, people need to be aware that it is a possibility if they are facing foreclosure, especially if the property they own has a significant portion of equity.

Chapter 7 bankruptcy can be a good way for people to eliminate debt. Not all debts will be eliminated through this type of bankruptcy, however. If people are eligible, they may want to talk to their bankruptcy lawyers about the possibility of filing Chapter 13 bankruptcy in the event they are facing foreclosure proceedings. Chapter 13 may give debtors the ability to catch up their payments over a repayment plan period lasting up to five years. This might better help people to save their homes.

Contact Our Texas Bankruptcy Law Firm For Help Today

If you’re facing bankruptcy in Texas, we’re here to help. Contact the experienced bankruptcy lawyers at Pelley Law Office, L.L.P., today to schedule a free consultation.

We proudly serve Plano, Dallas, Sherman, and the surrounding areas.

Pelley Law Office L.L.P. – Plano Office
Address: 1312 14th St, Plano, TX 75074
Phone: (972) 608-0335
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.0180322,-96.6952916,863

Pelley Law Office L.L.P. – Sherman Office

Address: 905 N Travis St, Sherman, TX 75090
Phone: (903) 813-4778
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.6445846,-96.6113141,857