In Texas, Bankruptcy or not paying?

[Rickc817]

In Texas, if all I have is credit card debt after a divorce, is it better in the long run to file bankruptcy or just not pay?

I have large credit card debt that has been given to me due to a divorce. It is more than what I can pay. Will it affect my credit less by filing bankruptcy or by just not paying? I have about $15k in credit card debt split over 4 different cards. I'm already a month or two behind in not paying them. Should I contine not to pay and try to work out a debt setllement, not pay altogether, or file bankruptcy? I just want to know what is better for me in the long run when I do decide to try and buy a house again.

 

[tpajet]

Call and try to work out a settlement with them. If you end up really and truly drowning in the debt, then you may want to consider bankruptcy, but that should be an absolute last resort. Generally credit cards will allow you to close the account, and just pay the interest. Some will put a mark on your credit report, others will not. But this is by far the best option.

With bankruptcy you will still have to pay the debts. By just not paying, they can get a judgment against you, and now that means wage garnishments (possibly). It's better to be in control of that.

$15K is a good size debt, but if you close the accounts and make payments, it shouldn't be that unmanageable.

 

[ronjon1980]

Wage Garnishment and Bankruptcy Exemptions -- Texas
WAGE GARNISHMENT EXEMPTION: 100% of wages are exempt


MAXIMUM INTEREST RATE:


Legal: 6% with agreement; up to 18% without agreement
Judgment: 10%


STATUTE OF LIMITATIONS ON ENFORCEMENT:


Open Account (credit card): 4 years
Written Contract: 4 years
Domestic Judgment: 10 years (Renewable)
Foreign Judgment: 10 years (Renewable)


Debt Kit has sample letters and techniques for dealing with debt collectors


BAD CHECK LAW DAMAGES: None


BANKRUPTCY PROPERTY EXEMPTIONS (Texas Revised Civil Statutes Annotated):


Can use either the state exemptions below or the federal exemptions


The State of Texas has exempted the property and income below from seizure by the bankruptcy court to pay creditors:


Real Property: Real property, unlimited value, up to one acre in town or city and 200 acres elsewhere (100 acre limit if unmarried) must file exemption with county, proceeds of sale are exempt for six months [41.002]
Personal Property: Jewelry up to 25% of total exemption, 60 livestock, motor vehicle, pets, 120 poultry, tools, total of all personal property, life insurance cash value, and unpaid commissions up to $30,000 or up to $60,000 for head of family, athletic and sporting equipment, boat, books, bicycles, cattle (12), equipment, clothing, farming or ranching equipment, two firearms, food, heirlooms, home furnishings, two horses or donkeys and saddle, blanket and bridle for both, professionally prescribed health aids to 100 percent; any or all of the following to a total value of $60,000 for a family debtor ($30,000 for a non-family debtor) [42.001 and 42.002]
Insurance / Annuities: Life, health, accident or annuity benefits, cash value, or proceeds (cannot exceed limit under personal property section above) [Insurance 21.22]; retired public school employees group insurance, unlimited amount [Insurance3.50-2(10)(a)]; Texas state employee uniform group insurance, unlimited amount [Insurance 3.50-2(10)(a)]; state college or university employee benefits, unlimited amount [Insurance 3.50-3(9)(a)]; benefits from fraternal society, unlimited amount [Insurance 10.28]; life insurance if beneficiary is debtor or debtor's dependent, unlimited amount [42.002(a)(12)]
Pensions / Retirement Plans: County and district employees, unlimited amount [Government 811.005]; firefighters [6243e(5) and 6243e.1(104)]; judges, unlimited amount [Government 811.005]; municipal employees, unlimited amount [6243g and Government 811.005]; police officers, unlimited amount [6243d-1_17), 6243j(20), 6243g-1(23B)]; tax-deferred retirement benefits, unlimited amount [Property 42.0021]; state employees, unlimited amount [Government 811.005]; teachers, unlimited amount [Government 811.005]
Public Benefits / Entitlements: Unemployment compensation, unlimited amount [522lb-13]; workers' compensation, unlimited amount [8308-4.07]; aid to families with dependent children [Human Resources 31.040]; medical assistance, unlimited amount [Human Resources 32.036]
Wages: Earned but unpaid wages, unlimited amount [42.001(b)(1)]; unpaid commissions up to 75% with limits (see personal property section) [Property 42.001(d)]
Miscellaneous: Business partnership property, unlimited amount [6132b-25]; amount of alimony needed for support [42.001(b)(3)]

OR FEDERAL GUIDE OF EXEMPT.

Federal Bankruptcy Exemptions


Federal bankruptcy exemptions are available to residents in Arkansas, Connecticut, District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin. Married couples can double the amount of the exemption amounts stated below. If you do not live in one of the states mentioned in the sentence above, you are required to use your state's property exemptions. If you use your state's exemptions, you may also use the federal non-bankruptcy exemptions.


Federal Exemptions [United States Bankruptcy Code 11 United States Code Sec. 522(d)]:


Real Property: Real property, co-op or mobile home up to $16,150 [522(d)(1)]


Personal Property: Health aids, unlimited amount [522(d)(9)]; Burial plot (in lieu of real estate exemption) [522(d)(a)]; Animals, appliances, books, clothing, crops, furnishings, household goods, and musical instruments up to $425 per item and up to $8,625 total [522(d)(3)]; implements, books, and tools of trade up to $1,625 [522(d)(6)]; jewelry up to $1,075 [522(d)(4)]; motor vehicle up to $2,575 [522(d)(2)]; personal injury recoveries up to $16,050 (not pain and suffering or pecuniary loss) [522(d)(11)(D)]; wrongful death recoveries, amount needed for support [522(d)(11)(B)]; lost earnings payments, unlimited amount [522(d)(11)(E)]


Insurance / Annuities: Life insurance proceeds, amount needed for support [522(d)(11)(C)]; disability, illness, or unemployment benefits, unlimited amount, [522(d)(10)(C)]; life insurance policy loan value, dividends, or interest up to $8,625 [522(d)(7)]; unmatured life insurance contract, unlimited amount [522(d)(7)]


Pensions / Retirement Plans: Retirement benefits, amount needed for support [522(d)(10)(E)]


Public Benefits / Entitlements: Social Security, unlimited amount [522(d)(10)(A)]; unemployment compensation, unlimited amount [522(d)(10)(A)]; public assistance, unlimited amount [522(d)(10)(A); crime victims compensation, unlimited amount [522(d)(11)(A)]; veterans benefits, unlimited amount [522(d)(10)(B)]


Wages: None


Miscellaneous: Alimony and child support, amount needed for support [522(10)(D)]; any property up to $850 [522(d)(5)]; any property up to $8,075 of unused portion of real estate exemption [522(d)(1)(5)]

 

[army judge]

Texas does not permit creditors (other than government entities) to bring garnishments against your wages.

They can attach a lien to real property (with a judgment), but can't take further action against you due to homestead exemption laws.

However, failure to pay can impact your credit rating.

Being late will impact those ratings, too.

But, your wages are safe from attachment in Texas (except as noted above).