Those who need help getting their finances in order could do so by filing for bankruptcy. In most cases, a debtor in Texas or any other state will file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is for those who have unsecured debts and make less than the median income in their state. It generally takes about three to six months to have debts discharged.

Equity in a home or car may be exempt from being used to pay off creditors. If a person makes more than the median income level, he or she may have no choice but to file for Chapter 13 bankruptcy. A Chapter 13 bankruptcy case could take several years to resolve, but it may be possible to retain property in such a proceeding. In fact, it may be possible to buy a car or add other debts while the case is still ongoing. However, this assumes that a lender is willing to make a loan while the case is still pending.

It can be a good idea to talk to the trustee overseeing a case to determine how a new loan could impact a repayment plan. Those who file for Chapter 7 bankruptcy are encouraged to wait until after their cases are resolved to apply for a car or other type of loan.

While bankruptcy may come with a variety of consequences, it can also come with a variety of benefits. For instance, it may be possible to obtain an automatic stay of creditor contact. If a balance remains on an unsecured debt at the end of a Chapter 13 repayment period, it might be discharged. In a Chapter 7 case, it may be possible to have debts discharged while paying little to unsecured creditors.