Bankruptcy has become very common in the United States. The cost of living has dramatically increased in recent decades, but wages have not kept pace. Add to this the financial burden of soaring medical bills, sky-high college tuition and the sharp uptick in housing prices, and it’s no wonder so many people watch helplessly as their debt spirals out of control.
According to federal court records, 1.6 million Americans filed for bankruptcy in 2018. Of those, about 640,000 filings were due to medical debt. At Davis, Ermis and Roberts, LLC, we understand that filing for bankruptcy isn’t a sign of financial irresponsibility. Many times, it is due to circumstances beyond the individual’s control. We are long-standing and well-trusted bankruptcy attorneys who are here to help you decide if bankruptcy is the right choice for your situation.
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Let’s start by taking a look at the true purpose of bankruptcy.
A Financial Fresh Start
Federal judges have said it best in their court cases: bankruptcy is an opportunity for a fresh start for honest, but unfortunate, individuals. When you file for bankruptcy, you are given the chance to start over with most of your creditors because a judge has determined that your debts should be forgiven.
Bankruptcy is not a quick or easy solution, and it does not come without consequences to your credit score. But if you are unable to pay your debts, it can be the best way to keep your personal property and have most of your debt wiped out. The details depend on which type of bankruptcy you choose to file. Always consult an attorney before you file; they know exactly which documents you’ll need to produce, they make sure you never miss a deadline, and they can force collectors to leave you alone during the process.
Chapter 7 vs Chapter 13 Bankruptcy
When most people think of bankruptcy, they think of Chapter 7. It discharges the debt, but the consequence is that you could lose a great deal of your property. Your assets are seized and then sold off to repay as much of your debt as possible. In Texas, you have the right to keep certain personal belongings, as well as your home and other protected assets.
Chapter 13 is basically a repayment plan. You and your attorney present to the court a plan to pay off most or all of your debts over time. The debt is lumped into a single monthly payment that is dependent on your income. With Chapter 13, you are responsible for repayment, but you don’t lose any of your property.
Both types of bankruptcy can lower your credit score by up to 200 points, and can stay on your credit report for up to 10 years. However, you can start repairing your credit immediately to minimize the damage. Davis, Ermis and Roberts, LLC, will help you rebuild your post-bankruptcy credit.
What Bankruptcy Cannot Do
Bankruptcy cannot discharge certain types of debt. These include student loans, alimony, unpaid child support, and some tax debts. Always consult an experienced bankruptcy attorney to make sure your debts will be discharged if you choose to file.
Davis, Ermis and Roberts, LLC: Your Trusted DFW Bankruptcy Authority
Do you need a fresh start? Are you ready to put your debts behind you and start rebuilding your credit? Our legal team specializes in judgement-free bankruptcy solutions. We stand by you and guide you through the entire process so you can be sure every detail is handled in accordance with the law. Call us today to learn more!