Get a New Financial Start with this New Year

 Posted on January 01, 2018 in Bankruptcy

Get a new financial start for 2026. Stop creditor pressures immediately, write off all or most debts, and responsibly deal with the rest.

That might sound too good to be true, but hundreds of thousands of people successfully do this every year. In fact, according to the Federal Courts of the United States, personal bankruptcies in the fiscal year ending in June 2025 totaled nearly 500,000 cases. 

Right now, the average American household carries over $100,000 in total debt, including mortgages, credit cards, auto loans, and student loans. Credit card debt alone reached record highs, with the average balance exceeding $6,500 per cardholder. When debt becomes unmanageable, bankruptcy provides legal protection and a path forward.

You have options for a better year in 2026. Call a Kerrville, TX consumer bankruptcy lawyer today and find out how you can start the new year off on the right financial footing. 

How to Get A New Financial Start in 2026

You can use bankruptcy to get a new start by discharging — or permanently, legally writing off — all or most of your debts. If you have mostly consumer or small business debts, you have two main choices for how to make this happen.

Under Title 11 of the United States Code, the two most common types of consumer bankruptcy are Chapter 7 and Chapter 13. Each provides different benefits depending on your income, assets, and the types of debts you carry.

To understand which chapter best suits your situation, you must analyze your complete financial picture. Income, property values, types of debts, and whether you want to keep certain assets will all factor into the decision. An experienced bankruptcy attorney can evaluate your circumstances and recommend the best path forward.

How to Get A New Start with Chapter 7 Bankruptcy 

With Chapter 7 "straight bankruptcy," you can get a new start very quickly. As soon as your case is filed, most of your creditors cannot collect their debts against you. Usually about three to four months later, the bankruptcy court enters an order discharging your debts. As quickly as that, you become debt-free.

The only exceptions would possibly be debts you want to keep and special debts you cannot discharge. Debts you might want to keep could include a vehicle loan or home mortgage; debts you cannot discharge include recent income taxes, unpaid child and spousal support, and criminal fines.

How Chapter 7 Works in Texas

Chapter 7 bankruptcy under 11 U.S.C. Section 727 provides discharge of most unsecured debts. Medical bills, credit card balances, personal loans, and many other consumer debts can be eliminated. The process begins when you file a petition with the bankruptcy court.

Filing triggers the automatic stay under 11 U.S.C. Section 362. This powerful legal protection stops collection activities immediately. Creditors must stop calling, sending letters, filing lawsuits, garnishing wages, or repossessing property. Violating the automatic stay can result in sanctions against creditors.

The bankruptcy trustee assigned to your case reviews your petition and financial documents. About 30 to 40 days after filing, you attend a meeting of creditors under 11 U.S.C. Section 341. Despite the name, creditors rarely attend these meetings. The trustee asks questions about your finances, assets, and debts. The meeting typically lasts 10 to 15 minutes.

If no issues arise, the court issues your discharge about 60 to 90 days after the meeting of creditors. Your total time in Chapter 7 bankruptcy runs approximately three to four months from filing to discharge.

How to Get A New Start with Chapter 13 Bankruptcy 

With a Chapter 13 "adjustment of debts," the new start is more nuanced, but sometimes much better in the long run. Just as with Chapter 7, once you file, your creditors cannot take any action to collect their debts. But under Chapter 13, that protection from creditors lasts not just a few months, but years. 

The final discharge of debts happens much later, but in the meantime, you can get many benefits that are not available under Chapter 7. You can deal in creative ways with special debts. You often have much more flexibility with secured debts like home mortgages and car loans. Plus, you get protection from collection actions against any cosigners, a protection that you do not get under Chapter 7.

You will usually finish your Chapter 13 payment plan in three to five years. Whatever debts you have not paid off get discharged, and you will be debt-free with limited exceptions like a home mortgage.

So, if you filed a Chapter 13 case this month, immediately your creditors could not chase you or any co-signers. You would enter into a doable payment plan to handle your special debts. And when that plan is paid off, you will have a clean slate.

How Chapter 13 Plans Work in Texas

Your Chapter 13 plan under 11 U.S.C. Section 1325 proposes how you will pay creditors over three to five years. The plan must pay priority debts in full, including recent taxes and domestic support obligations. Secured debts get paid according to agreements or through cramdowns and other modifications.

Unsecured creditors receive whatever money remains after priority and secured debts are paid. Many Chapter 13 plans pay unsecured creditors little or nothing. If your disposable income after allowed expenses is minimal, unsecured creditors might receive zero percent of what they are owed.

Plan payments go to the Chapter 13 trustee, who distributes funds to creditors according to your plan. You make one monthly payment to the trustee; the trustee handles paying all your creditors. This simplifies your finances and ensures creditors receive what the plan promises.

Completing your plan requires making all payments and staying current on ongoing obligations like mortgages and car payments. If you successfully complete your plan, the court discharges remaining unpaid unsecured debts. You emerge from bankruptcy having dealt with problem debts and with a fresh start.

Call a Kerrville, TX Chapter 7 and 13 Bankruptcy Attorney Today

Contact Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation about your bankruptcy options. Our Schertz, TX consumer bankruptcy lawyer has over 20 years of experience helping people get relief from overwhelming debt. We can evaluate your situation, explain which chapter fits your needs, and guide you through the process of getting the fresh start you deserve.