Thousands file bankruptcy in Texas every year, yet thousands more decide not to do it, even in the face of foreclosure, unemployment, and rising debts. Sometimes the decisions you make prior to bankruptcy define how the next years of your life will be. You may save money. You may save your home. You may get better mentally, simply being free of a mountain of debt. If you’re considering bankruptcy, it’s time to make some decisions.

Do you need bankruptcy?

You don’t always have to file bankruptcy. It’s an option, and sometimes your best option. The decision can be tough, but there are some strategies for making this decision. You may owe more than you make in a whole year. You may have a large savings, but if you spend it, you’re in a tough spot. You may recently have lost your job, and the debts you accumulated still exist. If you cannot pay off your debts in a reasonable amount of time without spending huge amounts of any savings, 401K, or retirement plan, you should consider bankruptcy.

Chapter 7 or Chapter 13?
Chapter 7 bankruptcy is a liquidation. You file in order to discharge debts, mainly secured debts like credit and medical debt. Say you owe $50,000 in credit card debt, and you make $40,000 a year. In this situation, filing bankruptcy is smart. You won’t make that much in a year, and you likely have other bills too. Or you may need some help in paying on your home, have a job, and make a decent amount of money. To avoid foreclosure and keep your home, you may consider Chapter 13 bankruptcy. These are both useful options for different situations.

How much can you save?
How much can you save by filing for bankruptcy? How much will you lose? If you file Chapter 7 bankruptcy, some of your assets may be sold to pay off your debt, but you stand to discharge huge amounts of debt. On the other hand, with a Chapter 13 bankruptcy you are paying on debts, but you get to keep major assets like your home and car if you keep paying on them through the plan. You stand to save more money on paper with a  Chapter 7 bankruptcy, but you may get more property saved, which adds up, if you file Chapter 13.

How much time can you invest?
Bankruptcy will take you some time. It’s not an overnight process. If you file Chapter 7, you may be done in  a matter of months, but should spend a considerable amount of time preparing. On the other hand, with Chapter 13, you are investing 3-5 years into paying off debts. Can you afford to do that?

Can you keep your home?
Foreclosure is a major problem for many in the U.S., but less so in Texas. With the Texas Homestead Exemption, only the mortgage lender has the right to take your home if you default on the payments – not other creditors, such as a credit card company. But you may not be able to keep paying on the mortgage, and need to file for bankruptcy. You have many options and a lot of help.

Do you need a lawyer?
If you are going to file Texas bankruptcy, yes you need to hire a lawyer. This is a critical decision. A lawyer will help you make all the decisions before, during, and after the bankruptcy. Yes, there are lawyer fees, but they are minimal in comparison to what you gain. Hiring a lawyer should be your easiest decision.