Bankruptcy

Q: Will Bankruptcy Affect My Credit?

While taking a toll on your credit score for a significant amount of time, bankruptcy offers at least the ending of your financial hardships within a decade of your filing. Conversely, ongoing legal and collection efforts will continue to erode your credit standing. Bankruptcy will affect your credit in several key ways that can have both short term and long term implications for your credit. How Bankruptcy affects my credit: It stays on your credit for 10 years Credit score drop of 160 to 220 points Difficulty reestablishing credit Negatively impact ability to rent A bankruptcy is not the end of the world, although at times it may seem the case as you work through the process, and the main antidote to that is time.

Sometimes, bankruptcy is the only solution. If you want advice on whether filing for bankruptcy is the right path to your financial freedom, take a few minutes to talk with one of our debt professionals. You might have more options than you think.

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3 Types of Bankruptcy

There are several different types of bankruptcy that an individual or business may file. Each type is designed to help debtors deal with their financial situation in the most beneficial way. Some of the most common types of bankruptcy include:

Chapter 7 bankruptcy

This type of bankruptcy is often filed by individuals or businesses and allows them to discharge most types of debt. In order to qualify for this type of bankruptcy, the filer must pass a means test and meet other eligibility requirements.

Chapter 11 bankruptcy

This type of bankruptcy is usually filed by businesses that are experiencing financial difficulty. However, some individuals may also be eligible for individuals. It allows them to restructure their debts and continue to operate their businesses while they pay off their debts over time.

Chapter 13 bankruptcy

This type of bankruptcy is usually filed by individuals and allows them to keep some or all of their property while reorganizing their debt payments into a payment plan that the court manages. In order to qualify for this type of bankruptcy, filers must have a steady income and pass a means test.

How much does it cost to file for bankruptcy?

Filing for bankruptcy (debt settlement vs bankruptcy) can be a difficult but necessary process. It is also an expensive one, with filing fees that vary by state and the type of bankruptcy you choose to file. Some costs to consider include the following:

Attorney fees

Depending on the complexity of your case and where you live, attorney’s fees for filing for bankruptcy can range from a few hundred dollars to several thousand. However, you may be able to find an attorney who will offer a reasonable payment plan or discount their fees based on your income.

Filing fees

These fees vary by state and type of bankruptcy, but they can cost upward of $1,000. Luckily, some fee payment plans are available, and some filers may be eligible to waive their fees.

Credit counseling

In order to qualify for bankruptcy, you will need to complete a credit counseling course that typically costs between $25 and $50 per person. Some states require this course even before you file your petition, so do your research before filing.

How long does bankruptcy stay on your credit report?

Filing for bankruptcy may impact your credit score. In fact, most negative credit information will stay on your credit report for up to seven years from the date it was first reported. This is true both for Chapter 7 and Chapter 13 bankruptcies.

The effect of bankruptcy on your credit score varies depending on a number of factors, including how long you have had any existing accounts, your payment history with those accounts, and your overall credit history. A bankruptcy can have a significant impact on your credit score right away, but over time this may improve if you are able to start rebuilding your credit by paying bills on time and responsibly using new accounts that you open after filing for bankruptcy.

How often can you file for bankruptcy?

One of the most common questions about bankruptcy is how often they can file for bankruptcy. The answer to this depends on several factors, including which type of bankruptcy you are filing under, state laws, and current financial situation.

In most cases, you can only file for bankruptcy once every seven years. Under federal bankruptcy laws, you can file for Chapter 7 bankruptcy only once every eight years. If you want to file for Chapter 13 bankruptcy, you must wait at least four years after a previous filing.

However, some exceptions to these rules may allow you to file again sooner. For example, if your financial situation has changed significantly since your previous bankruptcy filing you may be able to file again sooner. You can also prove extenuating circumstances, such as a medical emergency or job loss that contributed to past financial issues. In that case, you may be able to file for bankruptcy again sooner.

What are the downsides of filing for bankruptcy?

While it is possible to eventually rebuild your credit after a bankruptcy, filing for bankruptcy may hurt your credit score. It will take some time, diligence, and a willingness to change your spending habits in order to repair the damage. Working with credit counselors or financial advisors to develop a plan for how you can improve your credit score over time can help you get started on the path toward rebuilding after bankruptcy.

Should I Consider Filing for Bankruptcy?

Bankruptcy, or simply the condition in which an individual is unable to compensate their debtors, is a common occurrence in America. From 1980 to 2005, more than two million bankruptcy cases have been filed by debtors across the country. In many cases, bankruptcy is not a matter of reckless spending, but it is a definite matter of financial hardship for many people who simply cannot afford to deal with sudden unexpectancies such as job loss and costly medical bills.

Truth be told, many financial experts will discourage filing for bankruptcy to escape your debt and getting mental health debt relief. Make sure you’re fully informed before going down this road.

Bankruptcy Law is on Your Side

Surprisingly, bankruptcy is an essential fabric in the United States Constitution. The American founders were fixated on creating a system in which individuals burdened with a massive debt could relieve themselves and build a fresh start. According to the U.S. Bankruptcy Code, here are ways people can choose to file bankruptcy.

Liquidation – This is the basic chapter of bankruptcy. In this process, the court will assign a trustee to oversee the liquidation of all of your assets to pay your debtors. Though, this doesn’t necessarily pertain to your vital possessions, such as your primary residence or vehicle.
Adjustment of Debts – For those who don’t apply to liquidation due to income constraints, this process entails paying off your debtors within three to five years, using your regular income and other assets.
Reorganization – In this process, debtors are mandated by the court to submit a plan to reorganize their finances to pay back creditors in 120 days. This chapter allows individuals to pay back their debt and afford their living expenses.

What to do before filing for bankruptcy

As you can see, there are several options if you plan to file bankruptcy. To discover whether bankruptcy is the right course for you, or how to avoid bankruptcy contact Americor to learn all your options. Also, learn more about accelerated financial solutions and learn more about the current debt ceiling.

Bankruptcy FAQ's

Learn what bankruptcy is all about before making any major decisions.

Chapter 7 Bankruptcy Help

For many debtors looking for relief from their creditors, getting help for Chapter 7 bankruptcy helpis the best solution to get control over growing debt and aggressive collection efforts. Filing a petition for Chapter 7 bankruptcy places an automatic “stay” on debt collection efforts until the court has an opportunity to sort out your debts.

Under Chapter 7 protection, the legal code provides for the liquidation, or sale, of your nonexempt property and the distribution of the proceeds to your creditors to fulfill your obligations. Chapter 7 is often the last opportunity for debtors to end the cycle of debt that you find yourself mired in as a result of bills.

What You need to Know about Chapter 7

Unlike Chapter 13 protection, Chapter 7 bankruptcy does not require that you file a repayment plan. Chapter 7 might be the right bankruptcy solution for you if:

Your total debts equal more than half your annual income
You do not have many assets
The bulk of your debts are dischargeable
Repaying your debt will take longer than five or six years

Not all debts are dischargeable under Chapter 7 bankruptcy including child support obligations, student loans, and recent taxes.

Chapter 13 Bankruptcy

For debtors looking at mounting bills and a clear path out of debt (what is delinquent debt?), Chapter 13 bankruptcy might be just the thing to put your financial problems in your rearview mirror.

Under Chapter 13, individuals with regular incomes are given the time and protections to help reorganize their debts, and unlike Chapter 7 bankruptcy protection, you do not run the risk of losing your assets if you comply with all the bankruptcy court’s orders.

In many ways, Chapter 13 help is like getting a consolidation loan where you pay the Chapter 13 trustee before they pass the money on to your creditors.

What You need to Know about Chapter 13

Chapter 13 protection is an excellent way to reorganize your debts. Gaining protection under the bankruptcy codes is a process rather than an event, so be prepared to furnish a great deal of information to satisfy the bankruptcy trustee.

What You need to Know about Chapter 13 Bankruptcy:

A list of all creditors and the amount of money you owe
Detailed accounting of your income including amount and frequency
A list of all your property and assets
A detailed list of monthly living expenses
Chapter 7 vs Chapter 13

If you have the wherewithal to repay your debts, but just need some extra breathing room to reorganize what you owe your creditors, you can call Americor lending team to get your questions answered. Read on about mental health and finances and learn what is a lien.

Filing for bankruptcy

While filing for bankruptcy might seem like the end of the world, the reality is that it can be the beginning of a debt free life, wherein you can lay those fears to rest. With the right bankruptcy help, you can get through it stronger than ever.

What Do when filing for bankruptcy?

As you probably know, once you have filed for protection under the nation’s bankruptcy codes, the action will stay on your credit for a decade following the judgment. However, you do not need to wait patiently twiddling your thumbs for ten years because there are steps you can take to regain control of your credit. If you are wondering what to do if you’re bankrupt, a bankruptcy “what to do” list is a great idea.

Bankruptcy “What To Do” List

There are several proactive steps that you can take in the aftermath of filing for bankruptcy, and this bankruptcy “what to do” list can help guide your recovery.

Bankruptcy To Do List:

Check credit score for discharged debt
Reestablish credit as soon as possible
Keep older cards active
Do not apply for a flood of credit cards

As mentioned, bankruptcy protection is not the end of the world and you can take on the rest of your life with a clean slate.

Will Bankruptcy Affect My Credit?

Yes. But while taking a toll on your credit score for a significant amount of time, bankruptcy offers at least the ending of your financial hardships within a decade of your filing. Conversely, ongoing legal and collection efforts will continue to erode your credit standing.

Bankruptcy will affect your credit in several key ways that can have both short term and long term implications for your credit.

How Bankruptcy affects my credit:

It stays on your credit for 10 years
Credit score drop of 160 to 220 points
Difficulty reestablishing credit
Negatively impact ability to rent

A bankruptcy is not the end of the world, although at times it may seem the case as you work through the process, and the main antidote to that is time.

Bankruptcy Attorney’s

Changes in the bankruptcy laws have made it easier for consumers to navigate the myriad paper trails needed to successfully file for protection under the nation’s bankruptcy codes. In fact, upwards of 10% of filings, primarily Chapter 7 filings, are filed without any legal help or consultation.

However, every debtor’s situation is different, and for complicated filings it might be a good idea to consider hiring a bankruptcy attorney.

Complicated filings might include instances where you have collateral loans like automobiles and mortgages, or you are hoping to reaffirm a debtor agreement to help redeem the property in question. If you own more than the basic household goods, clothes, and furniture that you need to protect, then consider reaching out for legal representation.

Where can I Find a Bankruptcy Attorney

With something as important as your financial future on the line, you don’t want to risk picking the wrong attorney to represent you before the court trustee. While those with a lawyer in the family won’t have this problem, the majority of people looking for representation might not know where to start. Here are some good places to investigate when looking for an attorney.

How to Find a Bankruptcy Attorney:

Personal referrals
National Association of Consumer Bankruptcy Attorneys
Search Engines
Online Referral Services
Local Bar Association

If you have been garnished, served a subpoena, or otherwise been threatened with legal action, you should consider reaching out to a lawyer specializing in bankruptcy.

How do I Get Help Hiring a Bankruptcy Attorney?

The financial experts here at Americor are here to help you understand the bankruptcy process and the role a bankruptcy attorney can play in that process. Discover the best debt solution plan for your individual situation, as well as the important role played by legal representation by your side.