Are you drowning in debt and dealing with harassment from creditors every night during dinner? If so, we understand that the prospect of filing for bankruptcy can seem like the best way to get a fresh start.
Depending on the type of bankruptcy you file in Texas, your debt may be forgiven, and you might even be able to keep some of your assets. Further, there are several tactics that a debt resolution attorney can use to your advantage, such as fighting for your student loan to be discharged or fighting for your rights if a creditor commits stay or discharge violations. However, the process can be incredibly complicated, with several nuances and pitfalls.
Working with a debt resolution attorney or bankruptcy attorney can help ensure that the filing process for bankruptcy runs smoothly. Daniel Ciment of Ciment Law Firm, PLLC, is an experienced debt resolution attorney who developed a highly successful debt protection program to help his clients break free from debt and begin anew. In this article, he explains some critical things to know when considering bankruptcy in Texas.
The Pros and Cons of Filing for Bankruptcy in Texas
If you’re on the fence about whether filing for bankruptcy is the best solution for your situation, this list of pros and cons could point you in the right direction.
Benefits of Filing for Bankruptcy
- Some or all of your debts could be erased
- Creditors will stop contacting (harassing) you
- You can usually keep your car, tools of your trade, and educational materials
- Government pensions, retirement benefits, public benefits, insurance, etc. are exempt, meaning you can keep them
- Homesteads up to a specific acreage are also exempt
- You can stop foreclosure proceedings and get caught up on mortgage payments
- Wage garnishment stops
- Employers cannot discriminate against candidates who have filed for bankruptcy
Disadvantages of Filing for Bankruptcy
- Your credit score will likely drop significantly
- It may be more difficult to secure future financing
- A landlord might deny your application for renting a home
- If you apply for lines of credit or credit cards from financial institutions, you might pay a significantly higher interest rate
- Some debt will not be removed, including most tax and student loan debt, child support, and alimony
- You might have to give up some of your prized possessions
Practices to Avoid When Filing for Bankruptcy
We get it. The lure of a fresh financial slate is powerful, but you can jeopardize everything by trying to game the system. Even an “innocent” mistake could cause your bankruptcy petition to be dismissed, and you could face hefty fines or jail time.
To give your bankruptcy the best chance of providing you with debt relief, avoid the following:
- Lying about your finances: As you prepare to file for bankruptcy, you’ll need to get your financial information together to give to your bankruptcy attorney. This includes an inventory of your income, debt, assets, financial transactions, and more. If you attempt to exclude information, your bankruptcy case could be dismissed.
- Hiding assets: People think they’re clever when they “gift” cash, property, and other assets to friends and family members to avoid having them taken and liquidated to pay creditors. These transactions will be an instant red flag, and they often result in the debtor losing these assets permanently when, in fact, they might have had the opportunity to preserve them.
- Going on a shopping spree: If you know your debt will be erased, why not max out the credit cards and treat yourself to luxury goods and exotic vacations? Tempting as that sounds, unusual and excessive spending could thwart your goal of erasing credit card debt. Further, most credit card companies will not waive the 90 days of charges that occurred before your filing date.
- Not working with a bankruptcy attorney: Bankruptcy is a complicated process. First, you must determine if Chapter 7 or 13 is best for you. Because each option has its advantages and disadvantages, an experienced law firm can guide you in best practices that allow you to walk away with more of your assets – legally.
- Repeating the same behaviors: Having all or most of your debt forgiven can feel like the weight of the world has been lifted off your shoulders. However, you must adopt responsible financial habits after surviving a bankruptcy. Seeking credit counseling, formulating a budget, and learning how to live within your means can help to secure your financial future.
We don’t mean to imply that all (or even most) bankruptcies result from financial carelessness. Medical expenses create financial hardships and cause sixty-two percent of personal bankruptcies.
Tactics That May Benefit You During Bankruptcy
A few tactics your debt resolution attorney can employ that may benefit you during your bankruptcy case include:
- Getting Your Student Loan(s) Discharged:
Contrary to popular belief, it is possible to discharge student loan debt if you meet several conditions. The loans must cause you undue hardship by preventing you from being able to maintain a minimal standard of living. The circumstances causing this hardship must be unlikely to change during the life of the loan. You are also required to have tried to keep up with payments during the time when you have been dealing with these circumstances.
- Monitoring Stay Violations:
Creditors or collection agencies are not able to continue with collection proceedings during the automatic stay that is in effect as your bankruptcy proceeds. The bankruptcy proceeding is the means by which they may seek to collect on debts in this scenario, unless they appear on the discharge list. Also note that some debts are exempt from an automatic stay. There can be serious repercussions for creditors who violate the stay, and we can keep track of any such instances that violate your rights as a debtor in bankruptcy proceedings.
- Monitoring Discharge Violations:
Creditors on the discharge list are not allowed to contact debtors or engage in collection activities against them. Debtors can file a report with the court when this happens, and the creditor may receive sanctions for civil contempt and a possible fine.
Contact Ciment Law, PLLC, Texas Consumer Protection, to Discuss Your Options
No matter your debt issue, Ciment Law Firm, PLLC has an option for you, including bankruptcy. We provide legal debt protection services that help clients find debt relief, avoid harassment from debt collection agencies, and get a fresh start. Call us at 833-779-9993 for a consultation or fill out our online form.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.