should i file bankruptcyWe have helped many hundreds of Dallas-area residents with their bankruptcy cases over the years, and the most common question we hear first is “Should I file bankruptcy?”

When you are drowning in uncontrollable debt, you are inevitably stressed and scared – and bankruptcy seems like a huge step to take. That is why we offer free consultations. We want to help explain every step of the process and all possible outcomes, so you will be able to make the right decision for your situation.

Let’s look at the advantages and disadvantages of bankruptcy and ways to decide when bankruptcy might be the right decision for you.

What exactly is bankrtupcy?

The federal government established bankruptcy laws to allow individuals and businesses a way to get relief from debts that they are unable to pay back, in order to get a fresh start. The laws were created so that honest people who had unfortunate circumstances could get a clean slate and start over.

Chapter 7 and Chapter 13 are the two types of bankruptcy that apply to individuals. Chapter 7 allows you to erase all of your debts and is typically used by individuals with large amounts of unsecured debt and little income. Chapter 13 is more of a reorganization, where you use a payment plan to help you catch up on outstanding debts.

What are the advantages of bankruptcy

One of the most important advantages of filing bankruptcy is the “automatic stay,” which is a special notice to creditors that they must stop collection efforts immediately. Creditors are not allowed to call, send letters, file lawsuits, or seize assets.

The biggest advantage of bankruptcy is that the court will “discharge” certain debts, which means you will no longer be required to pay those debts. Youwill truly have a clean slate, and youwill be able to make a fresh start.

What are the disadvantages of bankruptcy?

Not all types of debt can be discharged in a bankruptcy. Youwill still be responsible for your mortgage, student loan debt, income tax debt, alimony, or child support.

Bankruptcy can also lower your credit score (but it is likely that if you have been struggling with debt, your score is pretty low already anyway). It will be difficult to get credit cards again in the future, so make sure you follow our post-bankruptcy tips.

Should I file bankruptcy?

As we will tell you in your free consultation, if your debt situation is not so dire that you can still figure out a way to reduce your debts or get clear with a payment plan, you might not want to file bankruptcy. You will typically want to file for bankruptcy when:

  • You have been out of work for a while and have no savings
  • You owe back taxes
  • You are facing foreclosure on your home
  • Your wages are being garnished due to a debt
  • You are facing a lawsuit over a debt

If you are struggling with overwhelming debt and considering bankruptcy, call us at 214-760-7777 today and schedule your own free consultation. We will listen to your situation and walk you through every available option, so you are confident that you are making the right decision.