Brownsville Texas Bankruptcy Legal Blog

For whatever reason -- a job loss, an illness or some other calamity -- Brownsville homeowners could find themselves struggling financially. It may become a challenge to meet the demands of a mortgage lender during this time. A homeowner may believe that it is possible to bounce back, but whether that can happen before foreclosure proceedings are filed remains a question. 

Approaching a lender right away about financial problems could leave the door open for a workout agreement. Of course, the lender must agree to change the conditions of the loan, which means that both parties need to get something out of the deal. Ostensibly, the lender continues to receive payments and the homeowner gets to continue living in the home.

Personal debt is growing nationwide. It seems that Americans are spending more money than they make, leaving them with thousands of dollars in debt. Surprisingly, overspending is not the leading cause of debt.

1. Medical bills. Nearly 62% of all personal bankruptcies filed are due to medical expenses. Severe illnesses can cost thousands of dollars—even with insurance coverage. Not only do the medical bills cause a financial strain, but the recovery time that keeps a patient away from work may cause lost wages.
2. Lost wages. Permanent or temporary time away from work often entail time without pay. Americans may not be able to afford their mortgage, car payment and other living expenses if a primary financial provider suddenly stops making money.
3. Credit card debt. Uncontrollable credit card spending often leads to bankruptcy. Overspending may impact house payments, car loans and other expenses, causing debt to spiral out of control—making it impossible to pay it all back.
4. Divorce. Divorce is expensive for both parties. Legal fees, the division of assets and child custody agreements can be messy and costly. If you have to pay alimony or child support, your finances will really take a hit.
5. Unexpected expenses. Unexpected medical expenses, natural disasters, burglary, and other unforeseen expenses are the fifth most common cause of bankruptcy. Keeping an emergency fund may help cover unexpected expenses.

The inability to meet financial obligations is something that many Texas residents experience at one time or another. Some people are able to recover from these circumstances, but others cannot. In those cases, they may consider filing for Chapter 7 bankruptcy, but worry they may lose the money in their bank and retirement accounts.

Losing these accounts could be a real concern for some people. Fortunately, a large number of filers do not have to worry. The goal of bankruptcy is not to leave an individual or family with no means of financial support. However, if the balance of a bank account is above a certain amount, at least a portion of it could be used to repay creditors.

Perhaps a Texas resident has spent several years accumulating certain assets but then falls on hard financial times. With the debt continuing to mount, he or she decides to look into filing a Chapter 7 bankruptcy in an effort to correct the situation. However, if a person owns certain assets, this may not be the right move.

This type of bankruptcy is commonly referred to as the "liquidation" bankruptcy. The trustee sells the filer's property and uses the proceeds to pay creditors. Fortunately, not all of a person's property is sold since the law acknowledges that people need some assets in order to live. When filing a Chapter 7, the law allows filers to retain property that falls under the category of exempt.