Is Bankruptcy a Good Option for You?
November 5, 2020 By: Carrie Weir
Factors to Consider When Contemplating Filing for Bankruptcy
If you’re experiencing significant financial difficulty, whether you’ve lost your job due to the pandemic, just gone through a divorce, or incurred substantial unreimbursed medical expenses, you may be contemplating filing for bankruptcy protection so you can get a fresh start. Here are some factors to consider when making your decision:
- Your debts won’t necessarily go away—There are two principal forms of consumer bankruptcy—Chapter 7 and Chapter 13. Some debts may be discharged (permanently erased) under Chapter 7. On the other hand, debts are reorganized under Chapter 13, meaning you still have to pay most or all of what you owe, but you’ll have a longer period of time to do so.
- You must qualify to discharge debts in a Chapter 7 bankruptcy—Before you can file for protection under Chapter 7, you must take a “means test.” If the results show that you have the resources to pay back your creditors over a three-to-five-year period, you won’t be eligible to file under Chapter 7.
- Some debts are not dischargeable in Chapter 7—You cannot get rid of most family law obligations in bankruptcy. Student loan arrearages and most tax debts also are very difficult to discharge.
- Bankruptcy only affects debt, not liens—If you have underlying liens on property (e.g., a mortgage or pledged collateral), bankruptcy won’t dismiss those liens. Your creditor can still enforce the lien, even if you don’t have to make the payments.
- Most qualified retirement plans are protected—This protection means you won’t lose the value of any money in an IRA, 401(k), or other plan.
- Cosigners may have liability if you file under Chapter 7—If a friend or family member has cosigned a loan for you, they may be stuck with paying it off if you seek to discharge debts through Chapter 7.
Contact an Experienced Rockwall, Texas, Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. I am currently communicating with clients by phone, text messaging, and videoconference. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and surrounding counties.