Is Bankruptcy Right for You?
That is a difficult question for most people to answer. The best approach to the question is to review your financial situation with a qualified Corona Bankruptcy Attorney. A lawyer can help you understand whether bankruptcy will benefit you or not in your situation, and whether other options might work better for you.
What is Bankruptcy?
Bankruptcy is a federal legal process for debt management available to most individuals and businesses. Successfully completing a bankruptcy case allows individuals and businesses to either eliminate or reorganize most of their debt.
When Should I Consider Bankruptcy?
You should consider bankruptcy when:
- You’ve been unemployed for several months and your prospects are questionable;
- It becomes evident you cannot pay your bills as they come due;
- You start considering using your VISA card to pay your MasterCard;
- You receive a letter from your mortgage company threatening foreclosure;
- You fear your car will be repossessed;
- Your car HAS been repossessed;
- You’re considering a home equity loan to consolidate your bills;
- You’re considering cashing in your 401(k) or your IRA;
- You’re worried about protecting other assets;
- A creditor is threatening or has filed suit;
- You have significant IRS debt;
- You just can’t abide any more collection letters and phone calls.
Many people are under the mistaken impression that bankruptcy will strip them of their assets. In the vast majority of cases, however, those who file bankruptcy keep all of their assets. In fact, assets like your home, car, pension fund and IRA are protected from your creditors if you file bankruptcy. Therefore, it is vital that you consult with a bankruptcy attorney before selling, transferring or cashing in any assets.
Are There Alternatives to Bankruptcy?
Of course. Some people have successfully managed their finances through nonprofit credit counseling centers like Consumer Credit Counseling Services of Greater Dallas, Inc. Among other services, CCCS intervenes with creditors to set up more manageable payment plans. Creditor participation in CCCS payment plans is entirely voluntary. CCCS cannot guarantee that a creditor will accept a payment proposal or protect you from further collection efforts. Also, credit counseling does not usually resolve secured debts like home and car loans.
You also have the option of doing nothing, which may entail certain risks. Creditors can obtain court judgments on the debt and then attempt to collect the judgment. Texas law allows creditors to satisfy their judgments out of the debtor’s property, including bank accounts and certain personal property. If you sell real property other than your home after the judgment is filed, you will most likely have to satisfy the judgment out of the proceeds of the sale. Judgment creditors cannot, however, foreclose on your homestead to satisfy the judgment, and they cannot garnish your wages.
What Kinds of Bankruptcy Are Available?
There are five kinds of bankruptcy:
- Chapter 7 – also known as “straight” bankruptcy
- Chapter 9 – reorganization for municipal entities
- Chapter 11 – reorganization for businesses and for individuals with excessive debt
- Chapter 12 – reorganization for family farmers
- Chapter 13 – reorganization for individuals with a regular source of income
Most individuals and couples file either a Chapter 7 case or a Chapter 13 case.
How Long Does a Bankruptcy Case Last?
- A Chapter 7 straight bankruptcy case usually lasts 6 months or fewer, unless the case is complicated.
- A Chapter 13 case will usually last from 3 to 5 years, depending on the repayment plan approved by the court.