Many distorted ideas and images are associated with bankruptcy, partly because the definition varies from state to state. In the simplest terms, you are legally declaring yourself unable to pay your debts. It is a popular misconception that it invites creditors to invade your home and take everything you own, but there are pertinent factors affect the outcome. It depends on the type, or "chapter", of bankruptcy that you declare, and more importantly, where you choose to file.
In Texas, the law gives you an opportunity to choose which items you have to give up and some get away without losing a thing. Fortunately, Texas is one of the most liberal states when it comes to exemptions so filing in Texas can bring benefits to families and individuals from all over. Most individuals or families in Texas declare one of two bankruptcies: a Chapter 7 or a Chapter 13. To file a Chapter 7 bankruptcy is to ask the court to absolve all of your outstanding debt. Your background will be wiped clean of financial obligations, but this "do-over" does come with a price. All non-exempt property will be sold for the profit of your creditors such as vacation homes, extra vehicles, and collectibles.
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Exemption rules also vary from state to state, but in Texas, the law generally allows you to keep almost all of your valuable assets. Texas also allows you to choose whether you want to use the federal exemptions or the state exemptions depending on which benefits the debtor the most. Cars and houses are good examples. Under the federal law, the maximum exemption for a car is a little over $3,000, but in Texas it can be up to $30,000. Lower-valued items, called personal assets, are not collectible and include things like your clothes, music, videos, and furniture. The threshold value that divides collectible from non-collectible will change according to state. But this doesn't mean you can just pick up your belongings and move to Texas to reap the benefits. There are residency requirements that must be met by the debtor. You should speak with a reputable Texas bankruptcy lawyer for more information on this.
Be conscious that filing a Chapter 7 will not just remove each and every one of your financial obligations. There are still debtor responsibilities that must be taken over upon the time of filing. Alimony and child support cannot be dismissed, as well as student loans, however certain income situations can protect the Texas trustees from taking some of this money from you. As far as mortgage goes or any loan involving collateral, these payments are not dismissed if the debtor is planning on keeping that particular piece of property. Also, any debt incurred after you have declared bankruptcy does not qualify, so take caution when you file so you can avoid accruing more debt in the future.
If your income or assets rise above a certain level, you will not be able to qualify for a Chapter 7 bankruptcy. In this case, a Chapter 13 bankruptcy is filed instead. This is calculated not only by what state or city you live in, but it also comes down to your personal zip code. Although many Texans filing for bankruptcy are unaffected by these stipulations, your income will not keep you from filing for bankruptcy. With Chapter 13, you will not lose any of your property to creditors, but none of your debt is wiped out immediately. Instead, you are required to calculate a feasible payment schedule for the next few years depending on much you can afford to pay. Texas alone has four different bankruptcy districts and each county is designated to one. You must provide proof to the judge of your designated district that you have the income to meet the requirements of the payment plan you have constructed, and only then will you be approved or denied. Keep in mind, things are rapidly changing on the Federal level, as well as within Texas, so staying up to date on the changes with a Texas attorney can benefit you immensely.
Besides material objects there are other things that can carry significance to you throughout the process such as your credit. Declaring bankruptcy does not help your credit score immediately, but it will not hurt it nearly as much as if debtors don't file when they do indeed qualify. A bankruptcy can appear on your record for up to ten years, and in Texas you can request that it be removed sooner. Regardless of when it disappears, you will have wiped free all of your previous debts in the mean time. In theory, filing bankruptcy allows you to promptly pay off any recently incurred debts, thus rebuilding your credit score for your future. Taking this step may very well result in a huge improvement to your credit score compared to the alternative of unpaid debts and worries lingering on indefinitely.
Nobody likes the stigma that can come with filing for bankruptcy, but just the petition itself can immediately affect your current situation in so many ways. It can put a halt on threatened repossession, stop wage garnishment, and bring an end to those dreadful debt collector harassments. It can give you the time you need to adjust your budget and draw up a payment plan. It can ultimately give you a second chance. All of these things are feasible with the first step of calling a Texas bankruptcy attorney so you have the opportunity to fully review the laws specific to the state. Find out if filing for bankruptcy is the most beneficial option for you by contacting a Dallas-Fort Worth bankruptcy attorney before it's too late.
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