There are many mistakes made regarding bankruptcy all the time in Texas. Though Texans are Texans and New Yorkers are New Yorkers, the general ideas of bankruptcy law are the same. The mistakes made are very similar too.
The mistakes made are not because of a lack of understanding on bankruptcy law, but general commonsense. Commonsense is about saving, not spending. And this brings us to common mistakes: spending savings, cashing out 401Ks, or tapping into a retirement fund rather than filing bankruptcy.
Why not spend your savings?
You can spend your savings. You may think it’s okay to do this before you file bankruptcy, or as a means of avoiding bankruptcy in the first place. This is wrong. Spending your savings only buys you a few months time. You might as well save the money. In a Chapter 13 filing, you need disposable income. In Chapter 7, your assets are liquidated, but most commonly Texans lose nothing in terms of money, property, or other assets.
Why not spend your 401K?
A 401K is not a fallback for avoiding bankruptcy. Just like spending your savings, it buys you months, or maybe a year, and then you are in the same position but with future money problems guaranteed. Bankruptcy is not a bad thing. Many in Texas file because it’s the right decision. Many cash out 401Ks thinking they can make the money back later. It may not be your plan, but an earlier bankruptcy instead of a later one puts you in a better position financially.
Spending Other Retirement Money
Retirement money is for retirement. Yes, if you have an incredible emergency, sometimes you do have to borrow against the future. But that puts you in danger financially.
Not Waiting to File Bankruptcy
The real decision to make is to stop the delays and consult with some legal experts. It’s recommended you consult with a lawyer, do some of your own research, and go over your finances. Bankruptcy may in fact not be your best option. But if it comes between spending money you will need later or spending it now, the obvious choice is to protect your future.
Texas Bankruptcy Help
Filing bankruptcy is not your only option. But thousands of Texas use it for the right reason: financial protection and debt discharge. A Chapter 7 bankruptcy may protect you from falling into impossible debt; delaying a Chapter 7 filing is rarely smart. A Chapter 13 bankruptcy may in fact need some funds to be possible, but it can protect your assets much better. In both Chapter 7 and Chapter 13, filing for help starts by asking for help. Don’t take the easy way out, nor make your decision based on one person. Consult with some legal and financial experts, the ones you pay because they have experience.
