It may seem almost impossible for a person to live without debt. Many people own credit cards and hence have some debt. Many Texans try to pay their debts as quickly as possible, but for some it may prove very difficult to be debt free.
However, with the constant ups and downs in life, managing finances so as to stay on top of debt can be difficult for many Texans. Many try to manage finances by planning expenses, minimizing credit card use and maintaining a savings account. However, with the rising cost of everyday necessities, education and housing, it can be very difficult to manage a budget. Also, unplanned financial emergencies can put even an otherwise well-prepared family in a pinch.
People with debts are constantly worried about debt collectors and fear they may lose their home or vehicle. Filing for bankruptcy can help wipe out debt and halt collection action. While Chapter 7 bankruptcy allows settlement of all unsecured debt, Chapter 13 bankruptcy allows for repayment of a portion of the debt over a period of three to five years through a repayment plan. If the person follows the repayment plan, at the end of the period the remaining debt may be discharged.
According to a law professor, most people file for bankruptcy to protect assets and income. Statistics from the Office of U.S. Courts revealed that the average household filing for Chapter 7 bankruptcy in 2012 had an income of $2,700 per month and nearly $116,000 in total assets.
When a person faces financial difficulties and rising debts, filing for bankruptcy may be a good choice. Filing for bankruptcy under Chapter 13 may help retain ownership of a Texas family's house and other significant assets. It may also help a struggling Texan plan a fresh financial start.
Source: Fox Business, "Debt judgment may trigger bankruptcy," Fred O. Williams, May 7, 2014