What You Need to Know Before Filing for Bankruptcy

 Posted on December 06, 2013 in Chapter 7 bankruptcy

If you are considering filing for bankruptcy in Texas, there are several things to consider before filing. While bankruptcy is a great way for many Americans to discharge or reorganize their debt, it could actually be a detriment for some families. In the wake of the Great Recession, the number of personal bankruptcies rose, according to a report from the Columbia Law School. In 2011, according to the report, bankruptcy filing “totaled about 5,800 per million individuals, meaning about one in every 175 Americans filed for bankruptcy protection.” This number was even higher in 2010, during which one in every 150 Americans filed. 

Now that the Recession has receded, many families that were close to insolvency are now on solid financial ground. Because of bankruptcy’s prevalence, however, many people who could otherwise solve their debts differently may think bankruptcy is their only option. The first step to determine if you should file for bankruptcy, according to the USA Today is to determine if you are judgment proof. “If you’re judgment proof,” according to Lawyers.com, “creditors can do virtually nothing legally to obtain money or property from you.” Examples of individuals who are judgment proof are those who have no assets to be collected, have insufficient property to pay a creditor’s claim, or who are protected by laws “that exclude wages and property from being used to pay a debt.”

Another factor to consider when you are contemplating bankruptcy, according to the USA Today, is to know if your state allows wage garnishment. Texas does NOT allow wage garnishment, except for child support, alimony, taxes, and student loans, according to the office of the Texas Attorney General. You should also consider whether or not you qualify for mortgage modification, according to USA Today. In many cases, once a family had the opportunity to modify their home loan to one that was more affordable, filing for bankruptcy was no longer necessary.

To determine if filing for bankruptcy is the best option for you, the importance of speaking with a qualified Texas bankruptcy attorney cannot be overstated. Don’t go through it alone. Contact the Law Offices of Chance M. McGhee today.