Legal Question in Bankruptcy in Texas

Recently married, lots of debt

I was reading about filing for bankruptcy and saw that I also have the option ''to do nothing''. I owe under 20,000. My question is : What are the drawbacks of filing compared to doing ''nothing'', besides the phone calls?

Asked on 3/12/02, 6:04 pm

1 Answer from Attorneys

Andrew Nichols Law Office of Andrew B. Nichols

Re: Recently married, lots of debt

Short answer -- From my perspective you would be better off filing.

The option of doing nothing probably is somewhat misleading. "Doing nothing" will mean that you will have to actively engage with your creditors by either speaking to phone collectors or writing your creditors to seek favorable repayment terms and/or suspension of interest. If you are employed I don't think you will enjoy much success. In addition, you are being gouged with interest rates (I guess between 16% to 21%) and as a result it will take years and years to repay. This is heavy emotion as well as financial burden. You would be better served by using your time and energy to focus on a savings strategy -- paying YOURSELF each month by contributing to an IRA or a mutual fund. Also, eventually a creditor could (and would if the balance is high enough) file suit against you and the result would be a judgment that stays with you indefinitely.

EVERYONE DESERVES AT LEAST ONCE CHANCE TO START OVER FRESH! Please read my firm's philosophy. Currently, the bankruptcy laws make it easy to file. The Congress and Senate may make changes to these laws making it very difficult to file for a complete "discharge" (the term in bankruptcy which means eliminate or wipe-out your debts) In the future it may be possible to discharge only a small portion of your debts. So if you had a judgment against you for example, you might only be able to discharge a portion of this debt.

Your question suggests you feel you may not have enough debt to necessitate or qualify for a bankruptcy filing. Right now, the Bankruptcy Code does not require a minimum amount of debt and currently there are no limitations to the amount of monthly income you can receive. Many people have the impression that they must be destitute in order to "qualify" for bankruptcy. This is not the case. If your income is high enough that it exceeds your necessary monthly expenses (not including payments on credit cards)substantially then you would probably need to file under Chapter 13 instead of Chapter 7 and repay a portion of your debts. In your particular situation I would doubt your monthly income is high enough to warrant a Chapter 13 filing. You would file for a complete "discharge" under Chapter 7. Please call me to discuss the your particular situation in greater detail. ph. (972) 231-5500 or (800) 303-0720

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Answered on 3/13/02, 8:51 am

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