Of course, that’s not just the case in Texas. Men and women in households across the country face difficult financial decisions given our current economy. Questions asked at the dinner table can range from how to cut back on summer vacation plans and who will be responsible for cutting coupons this week to which bills can’t be paid until next month and how to tell your youngest that plans to attend his dream college must postponed. What options are available to individuals or families who need to see some improvement in their financial position or face dire consequences?
In an effort to avoid foreclosure, many people try to sell their homes and find a new place to live with lower rent or mortgage payments. But, with today’s housing market, properties can have a “For Sale” sign planted in their front yard for months before an interested buyer is found. More and more debtors are turning to debt consolidation services, which promise on television commercials day and night to bring your monthly payments down to one manageable expense. However, what if your situation is so desperate that this choice won’t be enough to lighten your load? As Texas debtors and others across the United States have decided, filing for bankruptcy protection may be the best option in these difficult economic times.
Recent figures on bankruptcy in our state show what is becoming an increasingly harsh reality for fellow Texans, particularly in Austin, Houston, and San Antonio. In just the first few months of 2009, court records show that approximately 2,672 bankruptcy cases were filed in Houston. This number represents a 6.2% increase from 2,515 cases filed in the same period last year. The surge in submissions in some of our other major cities is even more surprising. In San Antonio, bankruptcy filings for the first three months of 2009 totaled 1,127, which is a 22.5% increase from the 920 filings, which occurred between January and March 2008.
And, the figures show that those living in our state capital of Austin are also trying to free themselves from some of their overwhelming financial burdens. Bankruptcy filings of all types in the Austin area totaled more than 800 in the first quarter of 2009, which is up 25% from the same period last year. Despite data showing more Texans struggling to maintain their personal financial position, our state is still faring better than most other states in the nation. Last year, Texas was ranked forty-sixth state in bankruptcy, even better than our 2007 ranking which put us at number thirty-nine. Of course, this relatively good news does not lessen the pain of any individual facing bankruptcy.
For those considering the option of declaring bankruptcy, you should be aware of the state and federal laws that affect such filings in Texas. There are two options available for individual Chapter 7 or Chapter 13 bankruptcy.
Chapter 7, the most common approach, is considered an outright liquidation bankruptcy where your non-exempt assets are turned over to a court-appointed trustee and then converted into cash to pay your creditors. In fact, most people who apply for Ch. 7 has no assets that are not exempt for sale and the Ch 7 bankruptcy filing is essentially a fresh start for their finances. The federal bankruptcy laws in Texas have taken this into account so you can determine whether you want to use federal exclusion laws or Texas laws when cataloging assets that creditors may not touch.
With Texas having the most generous list in the nation of what debtors may keep, most bankruptcy filers choose to follow Texas guidelines. You qualify for Ch 7 bankruptcy if your income is below the median family income in Texas, as determined by US Census Bureau statistics. If it is initially determined that your income is too high to qualify for Chapter 7 bankruptcy, the court may review your income from the last six months and your current expenses to make a decision based on your specific situation.
If the bankruptcy court determines that your financial status makes you ineligible for a Chapter 7 filing, then Chapter 13 may be the most appropriate course of action for you. Under this system, known as debt reorganization bankruptcy, debtors develop payment plans that will pay creditors over three to five years. If you have some non-exempt assets that you want to keep even after declaring bankruptcy, you may prefer to file for Chapter 13 bankruptcy. This also applies to people who have debts such as taxes or student loans that cannot be settled through Chapter 7 bankruptcy. .
While filing a Chapter 13 may look similar to working with a debt consolidation service, as both arrange regular payments with the aim of bringing you current with your creditors, individuals seeking financial assistance should know there is a difference in the two options. With Chapter 13, you get reassurance from a court-appointed trustee (who may or may not be an attorney) who works with you to ensure that payments are appropriate and properly processed. On the other hand, some private companies may commit fraud to profit by charging exorbitant fees and they may not even provide the credit waivers you desire. Such contracts should only be signed after completing extensive research on the company and reading the experiences of others.
Filing bankruptcy may seem like a great solution to a financial crisis that has been draining you for years and this is true in most cases. However, you must remember that when you hire an attorney and declare bankruptcy, you are affecting your assets, your credit score, and making publicly available records. It is important that you have an effective and thorough bankruptcy attorney who will be by your side as you navigate through the bankruptcy courtroom process and complicated paperwork.
Mistakes can result in the loss of assets that you consider important to protect. Federal criminal prosecution can result if you do not report some of your assets. Why take risks with your money, your valuables, and even your future? If you may be filing for Chapter 7 or Chapter 13 bankruptcy soon, your first step is to call an experienced bankruptcy attorney.
