Contemplating Bankruptcy? What You Need To Know Before You File

In this article, you will discover:

  • The major areas of your life that bankruptcy can touch.
  • Who will be aware of your bankruptcy filing
  • Why you should speak with a bankruptcy law attorney if you’re considering alternative options.

What Happens To My Credit Score After Filing A Bankruptcy In Texas?

Many people find themselves worried about what will happen to their credit score after bankruptcy filing — it’s completely understandable. The truth is, the way that bankruptcy will affect your credit score will depend in large part on your score at the time of your filing.

While each person’s credit history and future will be as unique as they are, there are some threads common to bankruptcy filings across the country. Typically, a person’s score will go up an average of 100 points – 12 months after the date of discharge.

It’s important to keep in mind: Some people find themselves in a position where they have a high credit score, but still need to seek bankruptcy protection. If you find yourself in one of these situations, it’s unlikely that you would see such a dramatic score increase. However, you will typically see a less significant credit score increase 12 months after the discharge of your debt.

Is Bankruptcy The Right Step For All Debtors Who Are In Serious Debt?

This is a difficult question to answer because what is right for one person may not be right for another – and “serious debt” means different things to different people.

In a Chapter 13 setting, serious debt would likely mean that the person is behind on mortgage payments, car payments, and/or they may owe the Internal Revenue Service back taxes. If this sounds like you, you may want to consider a Chapter 13 filing.

In a Chapter 7 setting, the main concern typically surrounds the amount of debt you have in relation to what income you need to service (pay off) your debt. If your debt service exceeds your income, you may want to consider a Chapter 7 filing.

Are There Alternatives To Bankruptcy That Should Be Considered First?

If you are behind on your mortgage payments or car payments and the creditor is not willing to work with you, there’s typically not an alternative to bankruptcy. Why? Because when you can’t get caught up on payments, you’re in jeopardy of losing the collateral.

If you’re in a similar situation, you should consider reaching out to a bankruptcy attorney as soon as possible to discuss your options.

Are There Alternatives To Be Considered In A Chapter 7 Bankruptcy?

Each person is as unique as their financial situation, so there may be alternatives to a Chapter 7 bankruptcy in the right circumstances – but this is always on a case-by-case basis. The worst option would be to pay money to a debt settlement company.  They are not in a better position than you are to settle your debts and will just cost you money in the long run that could be used to pay a creditor or hire a bankruptcy attorney.  If your ultimate goal is to increase your credit score, debt settlement is the worst option.

If you think you may be in a situation where you could service your debt, it’s a good idea to speak with a Chapter 7 bankruptcy attorney who can work with you to go over all your options.

Who Would Know If I Filed For Bankruptcy? How Public Is This Information?

Typically, no one will know if you decide to file bankruptcy – aside from those you choose to tell.

If you’re wondering, “Are bankruptcy filings public record?” Yes, they are. But it’s important to keep in mind that no one is monitoring these filings to post in a local newspaper. Of course, that may have been the case at some point in the past, but it is not a practice that newspapers and other publications keep in today’s age. Therefore, unless someone actively goes looking for your filing history, they aren’t likely to know about it.

On the other hand, an employer may know about your filing in a Chapter 13 case – particularly if there is an order to withhold part of your paycheck as part of a repayment plan. However, there are alternatives to Chapter 13 payments that exist outside of wage withholding, in which case, your employer wouldn’t need to know about the filing.

Can Filing A Personal Bankruptcy Affect My Business?

Bankruptcy can affect many different aspects of your life – including your business – but it doesn’t necessarily have to. Many people seek the best ways to mitigate the negative effects of bankruptcy in their lives, but miss out on the most important tool available to them: a knowledgeable attorney.

At the end of the day, bankruptcy is a legal process. So having an expert on your side is the best way to protect yourself from the worst of the process, while maximizing your protection.

As this pertains to your business, getting a consultation with a lawyer is the best first step. By speaking with an attorney, you can go over how you operate your business, what the assets and liabilities are for the business, and more – and get the insight you need to move forward with confidence.

Will A Bankruptcy Stop Foreclosures And Repossessions?

Bankruptcy can absolutely stop foreclosures and repossessions – and, particularly in the case of Chapter 13 cases, this is often the very reason for filing.

Whether you are looking to stop foreclosure, repossession, negative impact to your credit score, create a payment plan, or more, it is in your best interest to contact a law firm for bankruptcy support as soon as possible.

For more information on the Impact Of Bankruptcy On Your Credit Score, an initial consultation is your next step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.

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