Although credit cards can be helpful for addressing short-term expenses, many Texas residents find that as interest accrues, payments become increasingly difficult to manage. This is especially true if there are many accounts in question. Medical bills and other debts can exacerbate the problem of managing debt, and bankruptcy may offer a consumer an avenue of escape. However, filing for bankruptcy can involve many negative consequences, making it important to carefully evaluate the pros and cons.
Although there are many helpful benefits of bankruptcy, creating a written budget may enable an individual or couple to identify areas of spending that could be adjusted to free up resources for paying down debt. This can also be a helpful tool for future money management. Although the repayment process could take an extended amount of time, sticking to such a plan could head off the need to declare bankruptcy. Budgeting will also come into play during credit counseling. When consumers file for personal bankruptcy, they are often required to go through credit counseling first. In some cases, a counseling agency may be able to assist with the creation of a repayment plan that allows a client to avoid bankruptcy.
If bankruptcy appears to be the best step for managing one’s debt, there will be a financial means test to identify the options. Chapter 7 allows many unsecured debts to be discharged, but this also could require the sale of one’s assets to satisfy some of the debt. Chapter 13 allows assets to be protected as a repayment plan is implemented for a period of up to five years.
An individual may be concerned about making the best decision, and consulting a bankruptcy lawyer could provide helpful direction. If bankruptcy is deemed to be the most appropriate step, a lawyer can help with proper completion of the forms required to initiate the process.