Bankruptcy has a bad reputation in the US as something that will permanently destroy your finances and cost you important assets. However, bankruptcy’s reputation is undeserved. For people who cannot pay back their debts and who are at risk of having their assets seized, bankruptcy can be an extremely useful tool. Attorneys are used to hearing the following fears when people are considering filing for bankruptcy.
- My credit will be permanently destroyed: Your credit report will be influenced by filing for bankruptcy. However, this common fear needs to be put into perspective. If you are already very far behind on payments, then your three credit reports have already likely taken a beating. Depending on your situation, you may risk further damage to your credit and having assets or wages seized by creditors. In other words, you might cause your finances more damage by waiting to file. Furthermore, you can still improve your credit rating after filing by showing financial stability. Pay any remaining bills on time, such as rent, utilities and student loans to improve your credit.
- I will lose everything: This common fear is simply not true. Chapter 7 bankruptcy filers in Texas may discover that they can keep their important assets. The homestead exemption in Texas is quite generous, and many filers can keep their primary homes. You could also just continue to make payments on certain assets. Chapter 13 bankruptcy allows you to pay back your debts through a three to five-year repayment plan. You may keep secured assets so long as you remain current on payments.
- Other people will find out: While bankruptcy filings are public records, many people will not have to worry about others finding out that they have filed. However, there are instances where prospective employers may find out during a basic background check. This is typical for jobs that require a security clearance or working around money.
Should I Call a Texas Bankruptcy Attorney?
Most people are surprised when they speak with an attorney and discover that bankruptcy is not as scary as they thought. Depending on your situation, bankruptcy can prevent foreclosure and discharge certain debts that are causing you financial troubles. If you are at risk of losing important assets to creditors or are experiencing a wage garnishment, then bankruptcy is an option that you should consider. Bankruptcy protections exist for your benefit, they are not designed to cause you or others harm.