Personal bankruptcies peaked during the Great Recession and have been on the decline year after year as the economy continues to improve. While Texas has one of the lowest rates of personal bankruptcy in the country, with approximately 132 filings per 100,000 residents, it is still a fairly common occurrence here when you consider the sheer size of the population.
Before we get into how much it costs to file for bankruptcy, it would be helpful to cover what bankruptcy is, how it can benefit or impact those who file, and ultimately how to go about doing so.
What Is Bankruptcy?
If you have a debt that you can no longer pay, then bankruptcy offers you a remedy. It provides you with an opportunity to wipe away your unmanageable debt obligations and stop creditors from seeking payments from you. While bankruptcy should always be a last resort, it is important to note that you have a legal right to file.
The benefits to you for filing include:
• The elimination of your legal obligation to pay most or all of your debts.
• Stopping foreclosure on your home and allowing you to catch up on missed payments.
• Preventing repossession of your car or other property and forces creditors to return property that has been repossessed.
• Stopping wage garnishment and harassment from debt collectors.
• Restoring or preventing termination of utility services.
• Allowing you to challenge the claims of creditors, who may have committed fraud or are trying to collect more than you owe.
There are different designations of bankruptcy that can be filed depending on your situation. They include:
• Chapter 7 is known as a “straight” bankruptcy or liquidation. You may be required to give up property that can be sold with the proceeds going to payment of the debt.
• Chapter 11 is known as “reorganization” and is used by businesses.
• Chapter 12 is for family farmers.
• Chapter 13 is referred to as a “debt adjustment” and requires you to file a plan to pay all or part of your debt.
The majority of people in Texas and across the country file bankruptcy under Chapter 7 or Chapter 13.
You can continue to own exempt property and anything you acquire after filing bankruptcy. However, if you receive an inheritance, settlement, or life insurance benefit within 180 days after filing, then the money or property may be used to pay creditors.
If you owe money for child support, alimony, fines, or some taxes or loans you got by giving false information, debts due to “willful and malicious” harm, or student loans, then you are still obligated to pay them unless the court determines that such payment is an undue hardship.
Your Credit Score
If you need to file for bankruptcy, then your credit has probably already been adversely affected because of the debt you hadn’t paid prior to filing. However, filing won’t make things worse and it does wipe away your old debt, making it easier to pay current bills and begin to build your credit score once again. The fact that you filed for bankruptcy appears on your credit record for 10 years.
Although you won’t be able to get a credit card immediately after filing, you can pay any creditors with a debit card from your checking account. If a creditor grants permission, then you may be allowed to keep a credit card you already have or be able to obtain a secured credit card.
How Much Does It Cost to File for Bankruptcy?
One of the biggest concerns among those currently drowning in financial problems and considering bankruptcy is how much the bankruptcy process will cost. The cost of filing is $306.00 under chapter 7 and $281 under chapter 13 for an individual or married couple. There is an additional payment for attorney’s fees, and you can expect to pay an additional couple thousand dollars to obtain the services of a bankruptcy attorney.
Although you are not required to hire a lawyer when filing bankruptcy, it is advised that you do so. An attorney familiar with the bankruptcy laws in Texas will be able to guide you through the process and help you avoid any major pitfalls that might arise, saving you major headaches and allowing you to get your life back on track much faster.
Everyone’s situation is different, but if you are considering filing for bankruptcy in the great state of Texas, then you should contact the Texas bankruptcy lawyers at Fears Nachawati. Having an experienced bankruptcy attorney to turn to can help you decide if filing for bankruptcy really is the best option for your situation and how to go ahead with the process if so.
Please call (866) 705-7584 or visit the offices of Fears Nachawati located throughout Texas, including in Houston, Dallas, Austin, Fort Worth, and San Antonio.