Some Common Myths about Texas Bankruptcy

Do You Know the Truth About Bankruptcy?

Bankruptcy law is often misunderstood. Many people who could benefit from filing for bankruptcy do not file because they do not know the truth about bankruptcy. Here are some myths and the true story about bankruptcy:

Myth: Bankruptcy permanently damages your credit.

Truth: While bankruptcy does have an impact on your credit, having unpaid debt and late payments have a much worse impact on your credit score. Even though a bankruptcy may stay on your credit report for 10 years, you may start getting credit card offers for low-limit, secured credit cards within weeks of discharging your debt via bankruptcy. If you get a secured credit card and start making regular on-time payments, you should be able to get a regular credit card and improve your credit score within a year or two.

Myth: A bankruptcy will be reported to my employer

Truth: Even though there is a public record of your bankruptcy, the court does not send any notices to your employer. So, it’s very unlikely that your employer, neighbors or anyone else will find out. Typically, the only people who will know about your bankruptcy are your creditors and anyone that you tell.

Myth: If you file for bankruptcy you must sell all your property.

Truth: Bankruptcy court is a federal court, but there are some aspects that rely on state laws. In Texas, this usually works in your favor. You have a choice between federal property exemptions and Texas property exemptions. The Texas exemptions allow you to keep much of your property. You may be able to keep your home, farm, car, some cattle, jewelry, and retirement savings and other assets. You can compare Federal and Texas exemptions here.

Myth: Bankruptcy erases all my debts.

Truth: Although many debts will be wiped away (discharged), many of the debts that hit us the hardest can’t be wiped clean by bankruptcy, including: recent taxes, student loans, alimony payments, child support payments, court fines and criminal restitution and debts incurred after a bankruptcy filing.

Myth: Responsible people don’t file for bankruptcy.

Truth: Regardless of how careful you may be with your finances, with the rising cost of health care, millions of responsible Americans may be just one accident or illness away from financial ruin. According to The New England Journal of Medicine, medical bills are a leading cause of bankruptcy filings. When these debts start accumulating, bankruptcy may be the most responsible action you can take.

Myth: You don’t need a lawyer to file for bankruptcy.

Truth: It’s technically true that the law does not require you to have a lawyer when you file for bankruptcy. But the courts recommend it. An experienced bankruptcy lawyer can help you through the complexities of bankruptcy disclosures and filings. There are very specific rules about when and how these debts may be wiped clean. It’s important to consult a lawyer who understands the nuances of which debts can and cannot be eliminated in bankruptcy.

A Texas Bankruptcy Attorney at Oliva Law can Help

Overwhelming debt, creditor harassment and other financial stress factors can impact your finances, health, job performance and relationships. The Oliva law firm helps people in Brownsville, McAllen, Harlingen, Corpus Christi and throughout the Rio Grande Valley get a fresh start with bankruptcy and other debt management strategies. We can help you determine if bankruptcy is right for your specific situation. 


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