November 14, 2012

Top Five Myths about Filing Bankruptcy in Texas

While information about Bankruptcy is everywhere, differentiating myths from the truth can be troublesome. Despite the confusion, separating fact from fiction can be as easy as dispelling common bankruptcy myths and understanding how the process actually works, said The Carlson Law Firm.

As the holidays approach, finances can be tight, making life changing events like illness or loss of employment even more difficult for individuals and families to handle. Whether or not a person or family should file Bankruptcy in Texas can be a difficult decision; one which can be made even more trying with the abundance of information available on the web.

Myth 1. Filing for Bankruptcy Will Result in Loss of House, Cars, Possessions

Many states, Texas included, have Federal Bankruptcy exemptions, which sometimes allow filers to keep their property and home. While there are limitations on what is kept, sometimes these exemptions allow Texas bankruptcy filers to keep furniture, vehicles, firearms, pensions, insurance plans (including life insurance) and even retirement benefits.

In contrast with Federal exemptions, Texas allows an unlimited exemption for residents as long as a home is a primary residence and the filer has been a resident for more than 2 years. Contacting a Chapter 13 bankruptcy attorney in Texas is imperative to making sure that those who may potentially file for bankruptcy are eligible for such exemptions prior to filing.

Myth 2: Someone Who Files Bankruptcy Will Not Be Able to Re-establish Credit For 7-10 Years

After filing bankruptcy, filers may even experience an influx of credit card offers, appearing attractive to lenders. Immediately after filing, credit can begin to be re-established. Setting up a plan with a Bankruptcy attorney in Texas can help those planning on filing come up with a plan.

Myth 3: Only People Abusing the System File Bankruptcy

No one ever expects to go through some of the financial hardships that lead to bankruptcy, but nevertheless, piling debt can be a stressful situation for those enduring it.

While many people who are considering bankruptcy as an option for their financial situation may feel shame or embarrassment, the truth is, if a personal qualifies according to the median income, they are eligible to file. Unbearable medical bills, out-of-control debt, unexpected loss of employment and even divorce are just some of the more common reasons some people seek the aid of a bankruptcy lawyer.

According to a Health Affairs study completed by Harvard University, more than 60% of people who file for personal bankruptcy cite medical expenses as the reason for financial hardships leading them to file. The second most common reason people file bankruptcy in Texas is loss of job.

Myth 4: Paying Back Debt Individually Over Time Affects Credit the Same as Filing Bankruptcy

Despite efforts to pay debt back slowly, some debtors may continue to experience bad standing, which will reflect negatively on their credit. Once bankruptcy is filed, credit can begin being rebuilt immediately, which makes it a legitimate option for those drowning in debt.

Myth 5: Bankruptcy Ruins Career Opportunities and Force a Loss of Security Clearance

Having bad credit can sometimes hinder employment opportunities. But while poor credit can prevent some from following the career path they desire, bankruptcy can open the door for filers to begin rebuilding and improving one’s credit score, an important factor for job seekers requiring security clearances in their desired field.

Bankruptcy is designed to bring relief to those who have suffered unexpected setbacks; promoting the possibility of, once again, achieving financial stability. Checking with an experienced bankruptcy lawyer in Tx, who will accept payment plans and assist with creditor calls until full payment is received and bankruptcy is filed, is an important aspect that can bring relief from associated financial anxiety and stress.