Bankruptcy. With the current economy languishing for years, many consumers have been laid off, under-employed, or unable to find work while blowing through their savings, retirement accounts, tuition savings, and available credit lines. Add divorce, unexpected and uninsured medical bills, educational expenses for their children, and other financial emergencies and we have found that consumers need debt relief, and they need it now.
When Should You Consider Chapter 7 Bankruptcy in Consultation with a Consumer Bankruptcy Attorney?
If any one or more of the below fits your situation, you should contact us for a no-obligation bankruptcy consultation:
- When you can no longer afford to repay your unsecured debt, such as, credit cards, medical bills, car loan deficiency (previously repossessed), and other general debt.
- When your unsecured debts are about $10,000.00 or more and your cannot reasonably repay them in 3-5 years.
- When you are no longer earning steady income to sustain continued repayment.
When you no longer have long-term employment prospects due to your age, disability, low skills, long-term unemployed, or other factors.
- When wage garnishments, bank levies, or other executions have taken their toll on you.
- When your telephone is ringing off its hook, dunning letters are cramming your mailbox, and you have no reasonable means of repaying your debt.
- Inundated with unforeseen medical or hospital debt with no reasonable means of repaying it.
- When you are robbing Peter to pay Paul, routinely kiting your credit cards (using one card to pay another), falling behind in rent or mortgage or utilities to pay unnecessary, unsecured debt.
- When you repeatedly borrow money from friends and family just to make ends meet.
- When even friends or family will no longer lend you money.
- When you find yourself constantly worrying about the repayment of your debts.
- When you have equity in your home about $20,000.00 or less (in that case, you may be able to keep your home).
- When your assets or most of your assets can be exempted (protected) from your creditors.
- You earn less than the median income for your family size and state of residence and otherwise pass the Means Test
- Your monthly income (Schedule I) is near the amount your spend monthly on reasonable expenses of living (Schedule J).
What Kind of Debts Can I Leave Behind Me in a Chapter 7
- Unsecured credit cards
- Personal loans
- Medical and hospital debt
- Repossessed car loans where a deficiency (balance) is still owed
- Business loans you personally guaranteed
- Judgments on personal loans
- Car loan if you do not want to keep the car
- Home loans if you do not want to keep the home
What Kind of Debts Can I Generally Not Get Out from Under?
- Income taxes if they were assessed less than 3 years ago
- Property taxes
- Student loans (extremely rare to successfully get out of a student loan)
- Government-imposed fines (traffic tickets, parking tickets, criminal fines, etc.)
- Government-imposed restitution for any crime
- Damages you owe because you intentionally hurt someone
- Any damages you caused arising out of DUI/DWI
- Spousal support (alimony) or arrears
- Child support or arrears
- Property settlements agreements arising out of divorce
- Debts secured by your real property (home) or your car AND you want to keep the home or car
- Business payroll taxes you or your business owe
- There are other categories of debts you cannot get out of.
How Long Will a Bankruptcy Appear on My Credit Report?
The Long Answer
A chapter 7 bankruptcy notation may appear on your credit report for up to 10 years from the date your petition is filed. The bankruptcy notation (normally appearing in the “Public Records” section of your credit report) tends to make credit less available to you. Additionally, even where you may be eligible for credit, you may receive it on less favorable terms.
If you have high debt now, have high available credit/balance ratios, owe a lot in monthly payments, have high debt load to income ratios, unpaid judgments, etc., your credit score likely has already been severely affected. However, there are some occasions when your credit score may stay about the same or may even go up as a result of a bankruptcy discharge. This is because a bankruptcy discharge will zero out most of your credit accounts, zero out eligible judgments, will lower your previously high available credit/balance ratios, reduce what you owe on a monthly basis, and decrease the ratio of debt load to annual income. We have seen credit scores go up as a result of bankruptcy discharge. It is not common, but it does happen if you go into bankruptcy in really bad shape.
Consumer credit and creditworthiness is an extremely complex subject; future ability to obtain credit is dependent on multiple factors and difficult to predict. Moreover, if you are headed for bankruptcy, your credit reports and scores should no longer have an irrational impact on your self view. The idea is to get out of debt, not stress (obsess) over a credit report. Additionally, the typical bankruptcy client has already learned to live without credit for a number of years because creditors already closed on the accounts. If you have learned to live within your means, credit reports and scores should mean little to you now.
The Short Answer
Who cares? You should be done with credit. Right?
By now, a typical consumer in your position already had his or her credit cards
cancelled. The good news is that you may have already learned to live without credit cards. Without credit cards, you have most likely been forced into living within your means. Why wreck your Fresh Start dreaming about future credit cards?
What about emergencies you say? Well, if you remember the first time you applied for a credit card, you probably told yourself it was for emergencies too. The only emergency a credit card prepared you for was the one you are in now: bankruptcy. So forget about it.
Other forms of credit, such as responsible home-buying and necessary vehicle loans or leases is a different story. Staying out of debt after your bankruptcy, increasing your annual income, and waiting a necessary amount of years will likely in and of itself prepare you to be granted these secured loans.
We Want to Provide You with a Consultation
We provide Chapter 7 Bankruptcy protection (straight bankruptcy) to consumers after determining there are no other alternatives. While we do not provide Chapter 13 assistance (wage-earner’s bankruptcy), we do provide prompt Chapter 7 assistance after explaining in great detail the pros and cons of bankruptcy. We look very forward to explaining to you your legal situation in a free telephone consultation. First, you must fill out our contact form. Then, when we engage in our free telephone consultation, we will be able to explain to you your options and make recommendations. We even provide a payment plan if you choose to hire us for your bankruptcy needs.
We are a federally-designated “debt relief agency” that provides, where appropriate, relief under the U.S. Bankruptcy Code.