Tyler Texas Bankruptcy Law Blog

Texans who are experiencing problems with debt will frequently consider a variety of alternatives to get on stronger financial ground before considering the potential benefits of bankruptcy. Once they understand that bankruptcy is a perfectly legal and viable solution to improve their financial standing, they are still puzzled by which chapter would be best for their situation. The circumstances will dictate the final decision, but for wage earners, Chapter 13 is frequently considered the ideal option. Understanding why is the key.

Technically, Chapter 13 is an Adjustment of Debts of an Individual With Regular Income. It is used to let a debtor with a source of income have a plan in which they make payments for a certain time-period. This generally lasts for three to five years. For those who are debating on Chapter 7 vs. Chapter 13, there are a number of factors they should keep in mind. For example, people who have assets like a home or a motor vehicle will want to pick Chapter 13 as it allows them to retain the property. Chapter 7, a liquidation process, does not allow that in most cases.

Many families put a lot of extra charges on their credit cards during the holiday season, and it may be difficult for them to pay their credit card bill when the time comes. If you fail to make your credit card payments, the credit card company may eventually sell your account to a collection agency.

The credit card company or the collections agency may exercise their creditors' rights and file a lawsuit against you in civil court for the balance on your card. This will not happen right away, as companies will often try to collect debts for over a year before they go after you in court. Generally, if the court finds in their favor, the agency or company will be allowed to collect your debt by garnishing wages and tapping into your bank account. However, they won't be able to sue you forever. Each state has its own statute of limitations that prevents agencies and credit card companies for suing for unpaid debts after a certain period of time. For example, in Texas, debt collectors can only sue for debts that are less than four years past due.

Falling behind on your debts can quickly make your life difficult. You may feel overwhelmed and anxious most of the time, especially at night when you are trying to fall asleep. If you could pay your bills, you would, so when a creditor threatens to garnish your wages, it may increase your anxiety.

Because wage garnishment is a long process, you will likely have plenty of warning. However, if you are like many people under the burden of debt, you may have stopped opening your mail months ago and missed the notice that your creditor was taking you to court. If your paychecks are now suddenly much less than they were, you may want to seek some legal advice about your alternatives.

Once you have made the difficult decision to file for bankruptcy, you will have to decide which type of bankruptcy you should file. Most individuals will choose between Chapter 7 and Chapter 13 bankruptcy. While the general idea is the same (to eliminate debt), each type of bankruptcy comes with its own pros and cons.

People with minimal assets and/or below-average incomes in their state should qualify for Chapter 7 bankruptcy. Chapter 7 bankruptcy is useful in that it allows people who cannot pay back their debt to eliminate it by getting rid of their non-exempt property to pay off creditors. The process will only take a few months and you may even be able to keep some property if it qualifies as exempt. However, keep in mind that a Chapter 7 bankruptcy will be on your credit reports for up to 10 years after your filing date, thereby affecting your ability to apply for credit and acquire loans.