Most people view bankruptcy something to be avoided at all costs. By the time they finally file for chapter 7 bankruptcy in McKinney, TX, they are in serious financial trouble, with creditors threatening to sue and collections agencies calling multiple times every day. Their credit score is decimated, and they feel stressed and overwhelmed.
A Last Resort?
Many financial experts agree that bankruptcy should only be a last resort, but others disagree. They encourage consumers to file for chapter 7 bankruptcy in McKinney, TX before the situation becomes so dire that they are at risk of losing nearly everything. Trying to pay small amounts to a large number of creditors can mean not being able to pay the mortgage or the car payment.
Chapter 7 still does force the person to give up other assets, but keeping a certain amount of equity in the home and keeping the primary vehicle is allowed unless the vehicle is an expensive one. In that case, the individual will have to sell the car and buy something more reasonable. The idea is to pay the creditors as much as possible, after which the rest of the debt is forgiven.
Impact on Credit Rating
Another problem often mentioned is that bankruptcy stays on the person’s credit rating for many years. However, the credit score typically increases significantly within a year or two after filing. The person’s debt-to-income ratio is dramatically better than it was before. No longer are creditors reporting delinquencies every month. A secured credit card is available immediately, and this is a superb way to start rebuilding credit.
Hiring a Lawyer
One thing nearly all financial experts agree on is that people shouldn’t try to file for bankruptcy protection on their own. It’s best to hire a lawyer from an organization such as David S. Kohm & Associates to handle the work. This makes sure that all the paperwork is completed correctly. The lawyer is also better able to stop any creditors that do keep making communication attempts with the individual. The lawyer knows that these attempts qualify as contempt of court because the businesses are violating a court order to cease and desist collections action. Connect with us on Facebook and see our latest news and updates!
