How Do I Know If
Bankruptcy is a Good Option?
When facing financial adversity, filing for bankruptcy may be one of the last-ditch options you may be considering to get financial relief or achieve the fresh start you deserve. According to a study from the American Bankruptcy Institute titled Bankruptcy Filing Trends, there were 35,069 business and non‐business bankruptcy filings in Texas in 2019 alone. If you are considering filing for bankruptcy in Texas or if you’re exploring your options for financial relief, you should consider reaching out to a knowledgeable Texas bankruptcy attorney for proper guidance.
At Oliva Law Bankruptcy, our team has extensive knowledge and experience in bankruptcy-related matters. We are available to review your personal situation and help you explore all possible legal options in an effort to pursue the financial relief you need. Our founder, bankruptcy attorney Marcos D. Oliva, will provide you with the experienced legal guidance and advocacy you need to navigate every key decision in all of your bankruptcy proceedings. Our firm is proud to serve clients in McAllen, Harlingen, Brownsville, Corpus Christi, and throughout the Rio Grande Valley of Texas.
Evaluating Your Current Financial Situation
If you are considering filing for bankruptcy or if you are trying to determine if bankruptcy is the right option for you, it is important to evaluate your current financial situation. Here are some factors you should take into account that can help you make some informed decisions:
How Much Debt Do You Have?
Before you make any major decisions, it is important that you consider the amount of debt you have. Debt loads that are more than 40% of your annual income can quickly become overwhelming. At this point, you may be struggling to make your monthly payments. If this is the case, you may need to consider all of your debt relief options, including the possibility of filing for bankruptcy.
Money Coming In vs. What is Owed
At times, simple lifestyle changes can help you fix your financial situation. You can start by evaluating what you earn and compare that figure to what you currently owe. If you earn a considerable amount of income, you may only need to make a few simple changes over a period of time to offset your debt.
Are Collectors Calling?
Dealing with continuous phone calls, emails, and demand letters from debt collectors and collection agencies can be overwhelming. Filing for bankruptcy activates an “automatic stay” which will immediately stop all of their collection efforts.
Are You Eligible for Bankruptcy?
If you have enough income to pay your debts through a Chapter 13 repayment plan, you may be prevented from filing for Chapter 7 bankruptcy. Likewise, if your income is too low and your debts are too high, you may not qualify for Chapter 13 bankruptcy.
Know Your Bankruptcy Options
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as "liquidation" bankruptcy, helps individuals eliminate most of their general unsecured debts so that they can get a "fresh start” financially. In a Chapter 7 case, the Texas court will appoint a trustee (known as an independent contractor) to oversee your bankruptcy case. The trustee will gather and sell your non-exempt assets, then use the net proceeds from the sale to pay your creditors.
Assets that can be sold through Chapter 7 bankruptcy are referred to as non-exempt. These assets include, but are not limited to, second cars, vacation homes, second homes, family heirlooms, bank accounts, bonds, stocks, cash, and other investments.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as a "wage earner's" plan, is typically an option used by individuals who earn a decent income but are overwhelmed with debt. Chapter 13 bankruptcy allows you to set up a structured repayment plan that will enable you to repay your secured and unsecured debt while holding on to your home, car, and other assets.
Through Chapter 13 bankruptcy, the person seeking debt relief will propose a repayment plan to their creditors that can last anywhere from three to five years. This should provide enough time to pay back part or all of the outstanding debt during the proposed period of time, using future income. Chapter 13 bankruptcy is only available to individuals who earn a regular income.
Which Debts Won’t Be Forgiven?
It’s important to remember that not all types of debt can be wiped out through bankruptcy. Among the types of debt that won’t be forgiven include the following:
- Child support,
- Student loans
- Tax debts
Whether you file for Chapter 7 or Chapter 13 bankruptcy, you will still be obligated to pay these debts.
Identifying Which Assets Could Be Affected
While filing for bankruptcy will not leave you destitute, some of your major assets may be affected. Here is how some of the most common assets can be impacted by filing for bankruptcy:
- Your Home - Getting some of your debts forgiven can make it easier to pay your mortgage. Most people are allowed to keep their homes when they file for bankruptcy.
- Your Car - What happens to your car after filing for bankruptcy depends on Texas’ property exemption laws and what you’ve done with the car. If you put up your car as collateral on a loan, the creditor may be able to take the car after you file for bankruptcy. Although, the car may be considered an exempt asset. If that’s the case, you may be allowed to keep your car after filing for bankruptcy.
- Your Pension - Most pension plans and life insurance policies are protected by state laws. Therefore, you should not lose your pension, life insurance, or retirement accounts when filing for bankruptcy.
Discuss Your Options with an Experienced Texas Bankruptcy Attorney
Filing for bankruptcy can help individuals facing financial adversity obtain debt relief. However, this option may affect your personal life, credit report, and future interest rates. Therefore, before deciding whether or not to file for bankruptcy, it is important that you consider your situation carefully. A knowledgeable Texas bankruptcy attorney can help you understand all of your available options and offer you the proper guidance you need to evaluate and choose the best option for your situation.
For more than 15 years, our firm, Oliva Law Bankruptcy, has been providing outstanding legal counsel and guidance to clients facing complex bankruptcy issues. Bankruptcy attorney Marcos D. Oliva and his legal staff will evaluate your financial situation, help you understand your available bankruptcy options, and determine the right option for your unique circumstances. Our firm can advise you on how to protect your assets, make informed financial decisions, avoid potential pitfalls, and build a stronger financial future for yourself.
If you or someone you know is considering filing for bankruptcy, contact Oliva Law Bankruptcy today to schedule a one-on-one consultation. Bankruptcy attorney Marcos D. Oliva and his experienced staff can offer you the comprehensive legal counsel and strong advocacy you need to from start to finish. Our firm is also proud to serve clients in McAllen, Harlingen, Brownsville, Corpus Christi, and throughout the Rio Grande Valley, Texas — so reach out today to get the help you need!