09 Nov I Want to File Bankruptcy but My Attorney Tells Me I Shouldn’t. I Don’t Understand.
Recently I have had a number of potential clients that I have had to advise bankruptcy should not be considered an option for them. Why in the world would I tell a ready, willing client and with money in hand to my legal fees NOT to file bankruptcy? The reasons could be many, but typically it has been because they have assets such as extra acres of land that they could sell and pay their bills.
I am telling more and more clients that they can’t have their cake and eat it too. Bankruptcy is to help people who are unable to pay their bills – but this doesn’t mean you get to keep everything you own. In Texas, due to our generous exemptions, most debtors get to keep all of their assets. However, in many instances, if someone owns rental property, a second home, or other real property in addition to their homestead, I must advise them to try to sale this property and pay their debts. If they don’t and they file a Chapter 7, the bankruptcy trustee may take the property and sell it to pay their creditors. In a chapter 13 case, they may have to buy the property back from their trustee.
Recently, I advised a client who had approximately twenty acres of land, including their homestead, that he should try to sell some of the acreage and negotiate settlements with his creditors. Even though the creditors could issue 1099’s on the settled debt, his financial health would be better off in the long run as negative could be reported on his credit report for only 7 years (and it was only about 4 years left for the 7 years to be completed) whereas bankruptcy could be on his credit report for 10 years.
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