should i file bankruptcyWe’ve 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’re drowning in uncontrollable debt, you’re stressed and scared – and bankruptcy seems like a huge step to take. That’s why we offer free consultations… we want to help explain every step of the process and all possible outcomes, so you’ll 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’re 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 go on 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 have to stop collection efforts immediately. Creditors aren’t 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. You’ll truly have a clean slate, and you’ll be able to make a fresh start.

What are the disadvantages of bankruptcy?

Not all types of debt can be discharged in a bankruptcy. You’ll 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’s likely that if you’ve 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’ll tell you in your free consultation, if your debt situation isn’t 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’ll typically want to file for bankruptcy when:

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

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