For most people struggling with enormous debts, Chapter 7 bankruptcy is an opportunity for a fresh financial start. However, it is important to understand that this process has some downsides, depending on your circumstances.
Our attorneys could advise you of the Chapter 7 personal bankruptcy risks in Dallas before you submit your petition. You could assess the advantages and disadvantages of filing with our skilled Chapter 7 bankruptcy attorneys, gaining a clear understanding of the best path forward.
Loss of Non-Exempt Property
One potential risk of filing Chapter 7 personal bankruptcy in Dallas is the loss of non-exempt property. Chapter 7 is known as “liquidation” bankruptcy because the trustee can sell your property to satisfy your debts. Fortunately, the state has strong exemption laws that protect important items like your home or personal belongings. However, not all property is exempt. If you own certain assets, such as real property that is not your personal residence outright, creditors could sell them to cover some of your obligations.
Working with an attorney before you initiate your case could help you understand what state law does and does not protect. You might not be aware of exemptions that could protect your property from liquidation by the bankruptcy trustee. Our guidance could help you avoid unexpected outcomes.
Damage to Your Credit
Unsurprisingly, filing for Chapter 7 personal bankruptcy in Dallas risks damaging your credit score. A low credit score makes it difficult to secure loans for items ranging from homes to vehicles. Although many people already have serious credit issues before filing for bankruptcy, it can make their score drop even further.
The good news is that this damage is not permanent, as credit agencies will not keep a record of your bankruptcy forever. Your credit score may remain low immediately following a discharge by the bankruptcy court, but the fresh start allows you to begin rebuilding your credit score sooner.
Impact on Cosigners
Filing for Chapter 7 personal bankruptcy in Dallas could pose risks for anyone who cosigned a loan with you. You are primarily responsible for these debts, but anyone who cosigned your loans is also liable for the full balance. Unfortunately, while the automatic stay under the bankruptcy code protects you from any collection efforts, it does not extend to any cosigners you have. If your debt is discharged, your cosigner becomes exclusively responsible for the full amount owed.
Can All Debts Be Discharged?
Another risk to be aware of is that, while pursuing Chapter 7 personal bankruptcy in Dallas could erase your debts, some obligations are not dischargeable. If you owe back child support or have unpaid tax obligations, those will remain even after your case is complete. You could also expect to still owe your student loans after you finalize your bankruptcy. However, discharging unsecured debts like your credit cards could give you the resources you need to help pay for your remaining obligations.
Call Us to Discuss the Implications of Chapter 7 Personal Bankruptcy in Dallas
If you are concerned about Chapter 7 personal bankruptcy risks in Dallas, now is the time to reach out to one of our attorneys at Allmand Law Firm, PLLC. The right approach could help reduce or eliminate some of these issues. Call today to schedule your confidential consultation with our firm.
