When a Texas resident files for bankruptcy, tax debts could be discharged along with any other outstanding balances. However, it is not a given that a tax debt will be eliminated. If that debt is related to withholding taxes owed, it generally won't go away in either a Chapter 7 or Chapter 13 case. The same is true if a person is trying to use the bankruptcy system in an effort to evade a tax bill.
Texas patients who can't afford to pay their medical bills may be able to find help doing so. Across the United States, hospitals offered $38 billion in what is referred to as charity care. Sutter Health offers families of four without insurance who make up to $100,400 the ability to have their bills waived entirely. Those who have insurance can still ask to have their payment obligations waived.
The typical Texas resident has some level of debt. According to Experian, the average American household debt excluding mortgages was $24,706 in 2017. The average credit card debt last year totaled $6,354, which was a 2.7 increase throughout 2017. Those in the Generation X and Millennial age groups saw their credit card burden go up the most. Retail credit card debt grew 4 percent for an average balance of $1,841.
For people in Texas struggling with the burden of overwhelming debt, bankruptcy can be a real solution to help create a way out of a difficult situation. However, when considering filing for bankruptcy, it is important for a person to have an accurate and thorough understanding of how this process will affect his or her credit in the near future and the long term. Filing for bankruptcy is a serious action that can enable people to pay off their debts and get some relief, but it can also cause their credit scores to drop by 200 points.
Some people in Texas may be carrying a significant amount of credit card debt. By the end of 2017, Americans collectively added the most debt to their credit cards since before the recession of 2007. In all, total credit card debt is more than $1 trillion.
When Texas residents file for bankruptcy, they will be given an automatic stay from creditor collection actions. This may enable them to keep their vehicle while a bankruptcy case is ongoing. However, it may be necessary to pay any outstanding balance owed and keep up with current payments. Those who wish to purchase a vehicle while their case is pending may be able to do so with trustee and court approval.
Texas residents in their late 30s through their early 50s are more likely to have medical debt than any other generation. On average, Generation X owes more than $19,000 in medical debt compared to millennials, who owe $11,622 and baby boomers, who owe an average of just over $2,400. One in five people younger than 65 who have health insurance struggle to keep up with medical costs.
Generally speaking, Chapter 13 bankruptcy gives debtors the right to modify their mortgages by dividing the debt into a secured portion that is equivalent to the value of the property if it were to be sold today and a portion that is considered unsecure. However, this bifurcation usually occurs with properties that are not the primary residence of the creditor, such as a second home or an investment property. For example, a person living in Texas and filing for Chapter 13 bankruptcy might have to forego their summer home but not their primary home.
Many Houston residents are struggling with high debt levels. In many cases, these folks may want to do the right thing and meet their obligations to creditors. For those who are employed and have retirement accounts, borrowing from a 401(k) may be a tempting debt management strategy.
Some people in Texas who are struggling with debt might be able to use a 401(k) hardship withdrawal. Only certain types of 401(k) plans allow this type of withdrawal, and it can be used only for specific types of expenses. 401(k) hardship withdrawals can be used for funeral or burial expenses, payments that prevent foreclosure or eviction, repairs for some types of home damage, a new primary residence or medical bills.