Talking To Your Employer
If you have to list that company credit card, you need to talk with your employer before filing for bankruptcy. This isn’t something you want your accounting or HR employees or your boss to find out when they get a notice from the lender or from the bankruptcy court.
The thought of having to sit down with an employer and admit that youre going to declare bankruptcy can be intimidating. Keep in mind that it’s illegal to discriminate against a person for filing a bankruptcy case.
What Is The Difference Between Default And Bankruptcy
Defaulting on a loan means that youve violated the promissory or cardholder agreement with the lender to make payments on time. Each lender has its own requirements on how many missed payments you can have before it considers you in default. In some cases, that may be as little as one missed payment or as many as nine missed payments.
Filing for bankruptcy is a legal process that involves listing out your debts and assets and finding a way to resolve those debts. A judge will decide if any of your debts can be discharged and if your assets will be used to pay off the outstanding balance. The judge will also decide which assets youre allowed to keep and which can be taken from you.
Default and bankruptcy usually go hand in hand. Many borrowers default on their loans and then subsequently file for bankruptcy.
The Best Airline Credit Card For People With Bad Credit
Just because you’re limited to secured credit cards doesn’t mean you can’t still earn free flights. The AeroMexico Visa Secured Card offers people with poor credit double miles on certain purchases, a 3,500-mile bonus for opening and using your account, and a complimentary companion certificate for a free flight.
Unlike the other cards on this list, the AeroMexico Visa Secured Card does come with an annual fee of $25, but that low fee is more than covered by the companion pass. Currently, flights from New York City to Cozumel, Mexico, range from $350 to $650, meaning your card could save you upwards of $625 without other rewards included.
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Make It A Habit To Monitor Your Credit
Whether you opt for bankruptcy, debt consolidation or any other of the above options, it’s important to keep track of your credit score during the process.
With Experian’s free credit monitoring service, you’ll get free access to your FICO® Score powered by Experian data. You’ll also be able to view your Experian credit report, which is updated every 30 days. Other features include real-time alerts when changes are made to your credit report, including hard inquiries, new accounts and changes to your personal information.
As you stay on top of your credit, you’ll be able to spot potential issues quickly and address them before they damage your credit score too much. You’ll also be able to keep track of what your creditors are reporting to the credit bureaus and make sure it’s accurate.
As you come out the other side of your debt repayment plan, maintaining the habit of checking your credit regularly and developing good credit habits can help you achieve your goals of rebuilding your credit history more quickly.
Five Ways To Get Out Of Credit Card Debt
In the throes of this recession, the average Americans is just piling on more credit card debt and finding it more difficult to find a way out. According to a report released by TransUnion, as of October 2009, the national average for credit card debt $5,612 per person. The average! Thats scary knowing that the job situation is only getting worse with at least one company announcing job losses at least every week.
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So What Really Constitutes Undue Hardship
Those cases where borrowers have succeeded in having their student loans discharged are insightful. Specifically, a court might agree that repaying your loans would be an undue hardship if you cant maintain a minimal standard of living for yourself and any dependents, if the hardship will continue throughout the loans repayment period, and if youve sincerely tried to repay your loans before filing bankruptcy.
What does a court consider a minimal standard of living? Again, case law and some common sense can be a guide. It might mean:
- Your income has been below the federal poverty level for several years and doesnt show signs of improving.
- Youre on public assistance or dependent on a family member.
- You have a debilitating mental or physical illness or permanent injury.
- You have a child with a serious illness who requires round-the-clock care.
- Divorce reduced your family income with no hope of it returning to its previous level.
- Disability checks are your only source of income.
- You depend on public assistance to support your children.
- You support a spouse who was seriously and permanently injured in a car accident or who has developed a total disability.
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With Both Chapter 7 And Chapter 13 You May Be Able To Keep Your Home
So, while Chapter 7 and Chapter 13 bankruptcy are different, both can allow you to keep your home. And, because credit card and other debts are eliminated, making mortgage payments after bankruptcy will be easier.
Be aware that exemption laws do not protect all property a bankruptcy filing does not discharge all types of debts and there are different classes of creditors that may be able to seize your property. The attorneys at Fesenmyer Cousino Weinzimmer understand each of these distinctions and can provide the best legal advice to protect your assets. Call us for help today.
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You Write The Repayment Plan
The debtor, the person who filed Chapter 13, proposes the plan which can run from as little as 3 years to a maximum of 5 years.
Full repayment is not required in Chapter 13. How much you have to pay creditors depends on your income and your assets.
Were assuming here that you want to pay the credit cards in full, just without interest.
Take the card balances, add 5-10% of that total for trustee commission and divide by 60, the maximum number of months in a Chapter 13 plan.
There you have the rough monthly Chapter 13 payment to pay all of your credit cards in full, without any interest.
At the end of the plan, the debt, including unpaid interest, late charges, add ons and penalties are discharged, gone, unenforceable.
Tips For Using Credit Cards After Bankruptcy
Bankruptcy is a painful process but can be a meaningful way to gain a clean slate on your finances and a chance to rework your approach to credit management. If you resolve to keep credit purchases at a level you can pay off quickly, and avoid excessive debt, your credit standing and credit scores should gradually but steadily improve. Paying your credit card balance in full every month will also help you avoid interest charges and costly late fees.
Even more important is to pay your credit card bills on time. Payment history is the most significant factor that determines your FICO® Score, so steady on-time payments will help increase your score, while late or missed payments can seriously lower them.
Most credit card issuers offer tools to help you avoid late payments, such as email and text alerts, and the ability to schedule automatic payments every month. Taking advantage of these tools, or using any other method that reminds you to pay your bills on timesmartphone reminders, sticky notes, a desk calendarcan be vital to rebuilding credit after bankruptcy.
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Can I File A Chapter 7 Bankruptcy Case Without An Attorney
Bankruptcy attorneys help individuals who need debt relief file a bankruptcy case. However, the average attorney fee for a Chapter 7 bankruptcy lawyer can be $1,200 to $1,500. In addition to the attorney fee, you must also pay the filing fee to the bankruptcy court and the fees for your required bankruptcy courses.
If you can afford to hire a bankruptcy attorney, it is usually best to do so. Bankruptcy law can be confusing when you are trying to file a Chapter 7 case without an attorney.
You can file a bankruptcy case without an attorney and although itâs great to have an attorney, itâs not always necessary. If you canât afford to hire a lawyer, check if you’re eligible to use Upsolve’s free web app to prepare your bankruptcy forms
Could Anything Prevent Me From Being Discharged
It is possible that your discharge could be opposed by a creditor, an LIT or the Superintendent of Bankruptcy. Generally, a bankruptcy discharge is opposed when the debtor has not fulfilled the requirements of the bankruptcy process. This might be due to:
- Not making the required monthly payments
- Failing to attend two mandatory credit counselling sessions
- Committing an offence related to the bankruptcy claim
There are a few other reasons why a bankruptcy claim could be opposed. For instance, if the bankruptcy was caused by gambling or if a creditor suspects fraudulent activity, it could be opposed by the creditor.
If the bankruptcy discharge was opposed, the debtor would have to attend a court hearing to determine the conditions they would need to fulfil in order to be discharged from bankruptcy.
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Will I Be Able To Get A Credit Card After Filing For Bankruptcy
The reason I usually dont suggest trying to keep a credit card while filing bankruptcy is because youll get plenty of offers in the mail once you file. Although your current credit card company may decide that youre a higher risk because of the filing and cancel your card, there will be plenty of other companies that see you as a much safer bet since you dont have all that other debt to worry about after bankruptcy. You have to be careful, however, as many of these offers come with very high interest rates. While I like to reassure clients that bankruptcy wont prevent them from obtaining credit in the future, there are a series of steps that should be taken to rebuild your credit as quickly as possible.
As usual, these blog posts shouldnt be taken as legal advice nor does it form an attorney-client relationship. Laws are always changing and every state and situation is unique. Contact us or your local bankruptcy attorney for specific advice for your situation. Michigan consultations are always free if you call us at 237-7979.
Student Loan Hardship Options
If youre struggling with student loan debt, know that bankruptcy wont discharge that debt. However, there are options to make your payments more manageable.
Borrowers with federal student loans can choose to pursue deferment or forbearance for up to three years total. Depending on the type of student loans you have and the type of relief you choose, interest may still accrue during this time. Through Sept. 30, 2021, all federally owned student loans are automatically under forbearance with no interest accrual.
Another option for federal borrowers is to switch to an income-driven repayment plan with a loan forgiveness option. This will extend your repayment timeline, but because the plan bases your student loan payments on your actual income, your monthly payment may be as low as $0.
If you have private student loans, you may still be eligible for deferment or forbearance options. This depends on the lender if youre facing financial hardship, call your lender and ask about your options.
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What Happens When You Get Behind On Your Credit Card Payments
If you fall behind on your credit card payments, several things may happen. The credit card company may raise your interest rate, which means that less of your payment each month applies to the account balance.
The credit card company will charge late fees and other fees, such as over-the-balance fees which increase the amount you owe to the company. The company may turn the account over to a debt collector. A debt collector can be extremely persistent in its pursuit of the debt, including calling you at work and harassing you at home. is another common reason people file a Chapter 7 case.
Get Help From A Debt Settlement Company
An alternative to credit counseling is debt settlement. A for-profit company like National Debt Relief negotiates with creditors, such as credit card issuers, to reduce the amounts you owe and consolidate your debts into one lower monthly payment. In exchange, a debt settlement company receives a fee of 15% to 25% of the total amount of debts covered.
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Get Help Filing A Chapter 7 Case Without Paying An Attorney Fee
Although it can seem complicated, many people who file for Chapter 7 have a pretty straightforward cases. In these easier cases, it usually makes sense to file on your own but just get help with the paperwork.
Donât know where to start? A nonprofit like âUpsolveâ might be all you need. This free legal aid nonprofit can help you do your own paperwork and give you guidance on what to expect throughout the process.
Donât forget â Upsolve is free! The only costs you have to cover are the ones required by the court. Take their screener here to see if you qualify for their assistance!
Our unique bankruptcy software walks you through the process of filing a Chapter 7 case step-by-step. You can confidently complete your bankruptcy forms, file the forms with the bankruptcy court, and attend your bankruptcy hearing without an attorney.
In most cases, debtors receive their bankruptcy discharge within four to six months after filing their Chapter 7 bankruptcy petition.
You are required to pay the filing fee to the bankruptcy court and pay the fee for your bankruptcy courses. The filing fee is a standard fee, but you can typically locate a company that provides the bankruptcy courses online for $10 to $15 per course .
Chapter 7 Gets Rid Of Credit Card Debt And Judgment Debts
When you file a Chapter 7 bankruptcy petition, you include all your debts. A Chapter 7 case discharges most, if not all, unsecured debts, including credit card debts and personal judgments from debt collection lawsuits.
You receive a bankruptcy discharge when you complete your Chapter 7 case. The bankruptcy discharge relieves your responsibility to repay a debt. In other words, if a debt is discharged in bankruptcy, you are not responsible for the payment of that debt. The creditor is not allowed to take any actions to collect a discharged debt.
Examples of debts that are eligible for a discharge in Chapter 7 include:
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Old rent or lease payments
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Medical bills and debts
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Some old income taxes
Alimony, child support, and student loans are non-dischargeable debts. In a few cases, a debtor may be eligible for a hardship discharge for student loan debt. However, alimony, child support, and a few other debts are never dischargeable in bankruptcy.
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Other Actions A Creditor May Take After Obtaining A Judgment
State laws determine the legal steps a credit card company may take to collect a judgment debt. In some states, creditors are allowed to garnish your wages for judgments. Some states allow judgment holders to apply for supplemental proceedings to identify any personal property the judgment holder may seize to satisfy the debt.
The actions the credit card company takes to collect a judgment debt depends on the company. Some credit card companies and debt collectors pursue judgment debts aggressively. Thatâs because they can afford to have full-time attorneys working on their behalf. In some cases, a person could lose a substantial portion of his or her income in wage garnishments or lose property to satisfy a judgment debt.
Four Things You Should Know About Your Credit Card
One of the first tools post-bankruptcy debtor uses to rebuild their credit score is the credit card. While they may start off with a secured credit card, within a year of making regular payments post-bankruptcy debtors can graduate to unsecured credit cards. But what are some of the important facts debtors coming out of bankruptcy need to look at before choosing a credit card?
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Bankruptcy Calculator To Help Compare Your Options
Before you file bankruptcy, it is wise to explore all the options to deal with student loans, medical bills and credit cards. Each debt relief option such as Chapter 7 bankruptcy, Chapter 13 bankruptcy, debt settlement, debt management, and debt payoff planning have different costs, nuances and pros and cons to consider. The calculator provides the following:
Ascend provides information about bankruptcy for individuals who are struggling to pay debts they cannot afford to pay. Through our blogs, bankruptcy guides, and bankruptcy articles, we give you information about the various bankruptcy chapters and debt relief options available to you. If you need a bankruptcy lawyer, we can help you find a bankruptcy attorney near you. If you have questions, contact Ascend online or by calling 833-272-3631 to speak with a representative.
