This bankruptcy guide can help you save some time, money, and worries. Bankruptcy is not an easy process, but if you can stay positive, if you can follow the laws, if you can work to protect your property and income while discharging your debts, you can reap the benefits.
Chapter 7 bankruptcy is a perfect way to discharge your debts. It’s a liquidation, where your assets are sold to pay off your debts. Many think that “bankruptcy will take everything” or “bankruptcy will ruin my credit forever.” In fact, you rarely lose assets, especially big ones like your home and car. It does hurt your credit some, but there are strategies for improving it. After all, would a lender loan someone money who owed $20,000 or who owed $0? If you start small, opening a secured credit card, for example, you can start rebuilding credit and soon enough get new loans for a car and home.
You sometimes have to think outside the box on bankruptcy and credit issues. Many credit counseling programs explain how bankruptcy has too many costs. Well, you pay $299 to file Chapter 7 bankruptcy in Texas. You can discharge any amount of debt. You have legal protection against creditors. You can avoid getting wages garnished. You have far more options for protecting your home if foreclosure is a danger. Bankruptcy is a solution – be it an imperfect one – and it should be considered that way.
You pay $299, but what do you get? The most common problem we are having in Texas and the country is lack of medical coverage. Literally millions lack medical coverage. You go to the hospital for a serious matter, spend 3 days there, and owe $30,000, when you don’t even make that much money annually. Or you stay longer, and owe more than you might make in 5 years. This is the core reason for bankruptcy. A credit counseling company offers you no legal protection. If you do nothing, you risk losing everything.
On the other hand, many file bankruptcy not because of medical debt, but because of a credit card bill. While quite often these charges are unnecessary, there are also times, such as when you lose your job, when you have no other options. Credit card debt is the second leading reason for Chapter 7 bankruptcy in Texas. If your problem is spending too much, and you don’t stop, bankruptcy solves nothing. If you simply made some mistakes – and are willing to change and stop spending – it can solve some of these problems for you.
Will you lose your home? There is the Texas Homestead Exemption, which prevents creditors from taking your home, with the footnote that the mortgage company may have the right to bypass this. If you owe a $50,000 medical bill, the hospital cannot take your home. If you fall behind on your mortgage, the exemption does not protect you from the lender. So a foreclosure cannot be stopped in this way. You may prefer Chapter 13 bankruptcy.
If your main problem is one of secured debts – debts like your home – Chapter 13 may be more effective. Chapter 7 bankruptcy works well for unsecured debts, such as credit and medical monies owed. If you can file before the foreclosure process gets started, you can start paying in affordable amounts. If you tried a credit counseling agency, they can rarely help with secured debts, but bankruptcy can.
While filing fees are low, you should also consider a lawyer. Expensive, right? Well, figure out how much you stand to save and protect. An experienced bankruptcy lawyer charges from $1,000 to $2,000, and helps you save far more than that.