How Waiting Helps

• In many instances, waiting to file bankruptcy actually helps your situation in the long run. Although interest rates and penalties will continue to increase the amount you owe, if you know you are going to file bankruptcy, then it doesn't matter how high that number goes, since you will eventually be able to discharge all of that debt in bankruptcy. By waiting, you can accomplish important steps, such as saving enough money to pay a bankruptcy attorney and distancing yourself from certain charges that the court may not discharge. For example, if you recently took out large cash advances, the court is likely to render those nondischargeable. If you can put enough time between your bankruptcy petition and those charges, they may become dischargeable. If a lawsuit is filed against you in a Texas courthouse, however, you may have to accelerate your filing timetable.
  
  

Bankruptcy and Lawsuits

• If a creditor files a lawsuit against you in Texas, you will receive a summons from the Texas court to appear and respond to the charges against you. In most cases, if you owe a legitimate debt and a creditor files a lawsuit against you, you will lose your case, and the court will issue a judgment against you. Since a judgment authorizes the creditor to pursue direct means of collecting money from you, such as a possible asset seizure, you usually cannot afford to delay your bankruptcy filing if you receive notice of a pending lawsuit. In Texas, you not only can file bankruptcy after being sued, but it may be the most prudent course of action.
  
  

Judgment-Proof

• Although a lawsuit filed in a Texas courtroom may compel you to act, in certain situations, you may still be able to avoid filing bankruptcy. While a court may issue a judgment against you, if you have no property or income to seize, your creditor still cannot collect against you. In a general sense, this means that if you have no job and no possessions in your name you are "judgment-proof," and even a judgment against you cannot force you to pay anything to your creditors.
  
  

Texas Debtor Protections

• One of the benefits of living in Texas is that Texas has generous debtor protections, both in and out of bankruptcy. For example, while Texas does allow asset forfeiture in the event of a lawsuit and judgment, it does not allow wage garnishment, as other states do. Texas also allows you to keep your home if you file Chapter 7 bankruptcy, no matter how much it is worth. In other states, you may only be able to keep a home with a few thousand dollars in equity. Texas also allows personal property exemptions of up to $60,000 for a family, along with many other protections, such as pensions and public benefits. It is entirely possible that you can keep all of your assets if you file a Chapter 7 bankruptcy after you are sued in Texas.