Quite often we make small problems big ones, especially when it comes to financial issues. While some are well instructed on how to handle financial issues, others simply lack the time. If you are unsure of your financial situation, this blog guide can help you with key financial decisions. The point here is that you should avoid spending moneys you don’t need to, namely your 401K, your savings, and retirement money.

Why File Chapter 7?
Chapter 7 bankruptcy in Texas is not a magic solution, but it can be used to effectively cancel monies owed you simply cannot pay. In other words, use it, but use it with commonsense. You can only file Chapter 7 bankruptcy, for example, every six years. Therefore, when you do use it, file Chapter 7 for maximum effectiveness.

But why file? To file would mean discharging most if not all your unsecured debts. Secured debts are monies owed like your home and car, where you stand to have them taken by not paying. Unsecured debts would be monies owed on your credit card and medical bill. For example, if you owe a $50,000 medical bill, you could discharge this unsecured debt with a Chapter 7 bankruptcy. But, technically by Texas law certain items are exempt from being taken by certain creditors, namely your home. So Chapter 7 bankruptcy is an option on the table, but not all collections against you will result in your home being taken or your car repossessed. Yes, this is a complex issue, but by reading guides like this you are getting a better understanding.

Your Savings
Back to the point of the bottom line, if you owe $25,000 to creditors, and have $10,000 in your savings, money you perhaps saved for your future, you might consider using it. Should you throw your savings away, or should you file bankruptcy? This is a tough issue. First and foremost, you don’t always want to spend your savings, especially when it only buys you time or does not cover the bill. If you had $10,000, it would not cancel the bill. You may consider using your savings, 401K, and retirement package to pay the bill. What happens if you lose your job? Again, this is a tough decision, and not one to make alone.

Your 401K
Typically spending your 401K does not solve the problem either. We went over this point. If you only buy yourself some time, or if you simply accumulate new debts, it’s pointless.

Retirement Money
Instead of spending your savings, money you need to live on now, you may consider borrowing from the future. Why not file bankruptcy instead? Its’ not always your best option, but you get legal protection from creditors, you can save literally thousands of dollars, and you won’t be living on a small pension or Social Security when you retire.

The Bankruptcy Option

Chapter 7 bankruptcy for Texans is not always the best option, but it can be. The majority of the time, if you are only buying yourself a some months or years by spending savings, 401k, and retirement money, file either Chapter 7 or Chapter 13 bankruptcy instead. Chapter 7 is best if you owe a lot of unsecured debts, and can completely eliminate most all debts. Chapter 13 can better protect your property and assets.