Looks to be bankruptcy law today.
Chapter 11 bankruptcy is reorganization. Causes a stay of lawsuits and payments. When filed, no one can collect from you. After 30-45 days, there will be a meeting with creditors to negotiate settlement.
Chapter 7 bankruptcy is liquidation. Unsecured creditors generally get nothing. Assets are liquidated and money is used to discharge debts. Regardless of whether liquidated sum is adequate to cover all debt amounts, all debts will be discharged afterwards.
Chapter 13 is individual bankruptcy. It’s essentially a payment plan. You pay the courts, the courts then pay your creditors. If your income is above the median income for the state, you must repay within five years.
Currently, one must attend a credit counseling session within six months before filing for bankruptcy. One must also attend a class on debt management. There is a two-part means test to determine if someone is eligible to file chaper 7 or chapter 11.
Certain properties are exempt under state or federal law from being liquidated. In Texas, much of this falls under the Homestead Act.
Texas is very liberal with what property is exempt.
Voidable transfers are transfers of money to relatives or associates in the time leading up to the banruptcy. Generally these are frowned upon, to prevent fraud. The courts may require them to be returned to the pool of liquidated assets.
Debtor in possession means the debtor in a bankruptcy proceeding is allowed to keep and manage the property as though they weren’t in a state of bankruptcy.
When you file bankruptcy, all your assets, barring exempt assets, become part of the bankruptcy estate.