Claiming bankruptcy anywhere in the country can have an immense effect on your financial future. You’ve likely heard some stories, both good and bad, about bankruptcy. Maybe a horror story where a family lost one job, then a house, and were left with nothing. Or a family who had already had nothing, received a $50,000 medical bill, and were out of options. There is an answer: filing bankruptcy. If you lose your job, have debt you simply cannot pay, a Chapter 7 bankruptcy can often be a life saver. If you are in danger of losing your Dallas home to foreclosure, Chapter 13 bankruptcy provides legal protection. How do they help? What will it effect?
How does bankruptcy help?
Dallas and Texas in general have seen thousands of residents successfully file bankruptcy in the past year. The reasons are pretty simple: credit and medical debts. Studies have pointed out how medical bills for those with coverage are in fact the biggest reasons for filing bankruptcy, not credit cards. But credit card debt is a big part of filing too. If you own a lot of assets, especially a home, these can be protected by filing bankruptcy.
Does it hurt your credit score?
Yes, filing bankruptcy does hurt your credit score. This is a downside, but the alternative really isn’t much better. It will typically take you some time before your credit is rebuilt. You can take small steps such as opening new accounts and always paying on time. The alternative, where your assets are taken, where your wages are garnished, and where you are in danger of losing a home is much worse.
What if you have no job?
If you are filing Chapter 7 bankruptcy, which discharges most all your debts, having no job is almost a good thing. In Texas, if you make higher than the median income for the state, you are forced to file Chapter 13. This is based on the means tests for how much you made in the past six months compared to other Texas residents. If you, for example, have a high paying job or had one and lost it, you either are not eligible or you might have to wait until you can prove a lack of income.
What if you have a student loan?
Usually you still have to pay student loans. Also, taxes, child support, and alimony debts are usually not discharged.
What if your home is in foreclosure?
If the foreclosure is ongoing, all you can do is buy time. For example, if you file bankruptcy a few weeks after the foreclosure papers have been filed, quite often the foreclosure will be delayed but still go through. If you filed before the foreclosure begins, specifically by filing Chapter 13 bankruptcy, you may have the chance to save your home.
How much will it cost?
To file Chapter 7 bankruptcy with the Texas courts you pay $299, and $274 for Chapter 13 bankruptcy. Lawyer fees vary, usually from $1,000 to $2,000. Hiring a lawyer has immense benefits in discharging the most debts, protecting your home from foreclosure, handling creditors, and managing any problems in court. The fees are even more minor when you can discharge huge debts.
