Texas residents who are having financial difficulties sometimes choose to pursue debt settlement instead of filing for bankruptcy. Debt settlement companies offer to negotiate with creditors to lower the amount owed or monthly payments in return for a fee, but taking this path may leave consumers in an even worse position. There is no guarantee that creditors will accept less than the full amount, and any savings that are realized may be meager after the debt settlement company and the Internal Revenue Service have taken their share.
Texas residents who are considering bankruptcy do not take their decision lightly. They usually go back and forth determining if it is right for them. Here are some tips to help individuals determine if this is a good step to take for their circumstances.
When people in Houston struggle with excessive amounts of personal debt, they may turn to bankruptcy to find a new path to financial freedom. There are several factors that can help people determine whether filing for a Chapter 7 bankruptcy is the best option for their situation or if they should consider Chapter 13 or another approach.
Bankruptcy may be an option for Texas residents who have significant debt that they are unable to pay. One type of bankruptcy, Chapter 7, is the most frequently filed bankruptcy.
Debt from student loans can be a huge financial burden, and many graduates wonder if they can discharge this type of debt through bankruptcy. Unfortunately, the answer for most is no, but there are some notable exceptions. This has a lot to do with the Bankruptcy Abuse Prevention and Consumer Protection Act, which exempted both private and federal student loans from bankruptcy discharge. The rationale behind this law is not very clear.
While bankruptcy may help Texas residents gain control over their finances, there are limits to how often a person can file. Individuals who filed for Chapter 7 bankruptcy cannot file another Chapter 7 petition for eight years. Furthermore, they cannot file for Chapter 13 bankruptcy for at least four years after the Chapter 7 case was filed. The rules are slightly different for debtors who file for Chapter 13 protection.
Texas consumers who file for bankruptcy may find that its relatively easy to improve their credit score after doing so. According to a Lending Tree report, 65 percent of Americans had a credit score of at least 640 three years after filing. There are many steps that people can take after filing for bankruptcy to improve their credit score.
Texas residents who wish to escape overwhelming debt may be unfamiliar with the differences between a Chapter 7 and a Chapter 13 bankruptcy. Those who file Chapter 13 bankruptcies make payments for three or five years to pay down all or part of their debts, but debtors who file successful Chapter 7 petitions make no further restitution and see some or all of their debts discharged. This can make Chapter 7 bankruptcies seem far more attractive, but qualifying for a Chapter 7 petition can be difficult.
When Texas residents or others file for bankruptcy, they generally must disclose all of their assets. One woman who failed to disclose that she had $3,500 of cash on hand had her Chapter 7 discharge blocked. The woman said that she didn't disclose the cash as an asset because she needed it to pay rent and other expenses. After hearing this, the bankruptcy trustee argued that the woman had lied under oath.
If you are preparing to file for bankruptcy, you are also probably worrying about which assets you can keep and which you will lose. Exemptions are key, and Texas provides filers with some of the most generous exemptions in the nation.