Who Can Help Me Decide If Bankruptcy Is Right For Me
A Licensed Insolvency Trustee is the only professional licensed and authorized to administrate a bankruptcy filing on your behalf.
They are the most qualified to help you understand your financial situation and the different debt relief strategies that are available to you, fromdebt consolidationto bankruptcy, and everything in between.
Your first meeting with an LIT is free. During your consultation, your LIT will be able to provide a full debt assessment, an explanation of each option and their recommendation for your best step forward. The initial consultation usually lasts about one hour, and you are under no obligation to pursue any of our services.
Going through something like filing bankruptcy can be scary, humiliating and so overwhelming, but Adam set our minds at ease. He explained everything in detail and ensured we were aware of all potential options. When it came time to proceed, he helped us make an informed decision, answered all our questions, ensured we were 100 per cent comfortable with our decision and all potential outcomes before proceeding with filing.
M.G., Newfoundland
Cons Of Credit Card Refinancing
- If you dont have a you may not qualify for a 0% interest rate credit card. Additionally, you may need to have a to receive more than six months of 0% interest on a credit card. But each credit card company will have different qualifications.
- The 0% interest rate doesnt last forever. It generally lasts between 12 to 18 months. If you dont pay off the majority of your debt in that time frame, youll be back to 16% to 20% interest rates. If you havent paid off most of your debt by the time the interest rate jumps, you may find yourself in a similar situation as before you refinanced your credit cards.
- This method may not be effective if the credit limit on your new card isnt sufficient enough to cover the majority of what you owe on your existing cards.
- When you transfer all your debt to this new credit card, you will probably face 3% to 5% fees on the transferred balance.
- You could lose the 0% introductory rate if you make a late payment or go over the credit limit.
- Its possible that you wont be able to transfer balances between cards from the same lender.
Unsecured And Secured Debt
Most types of credit card debt are unsecured. This means that there is no lien on the items that you purchased with the credit card. These debts are typically discharged in a chapter 7 bankruptcy, but a chapter 13 bankruptcy may require you to pay at least part of what you owe. A secured credit card, on the other hand, may allow creditors to have a lien on whatever items you purchased. If that is the case, your creditor may repossess the items even if you file for bankruptcy.
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Chapter 13 Bankruptcy For Credit Card Debt
Chapter 13 bankruptcy is called reorganization and unsecured debt, like credit cards, is given a very low priority in the reorganization.
When you file for Chapter 13 bankruptcy, you submit a plan to the bankruptcy trustee that says you will pay most, if not all, of what you owe in three to five years. The next step is to prioritize the debts, starting at the top with secured debts , and priority debts .
Unsecured debt, like credit cards is at the bottom of the priority list.
The Chapter 13 filer then looks at his current and future income and determines how much will go to repay debts in a 3-5 year period. Very little, if any, is set aside for credit card debt.
If the bankruptcy trustee agrees with the plan, and the consumer makes the required payments, all debts are discharged, including credit card debt, when the final payment is made.
Because Chapter 13 bankruptcy does not put much emphasis on repaying unsecured debt, its likely most, or all of what you owe on credit cards will disappear with a successful discharge.
What To Do After Chapter 7 Bankruptcy
Push the re-start button on your financial life.
Thats the first thing anyone should do after having debts discharged in Chapter 7 bankruptcy. Hopefully, that re-start button includes a plan for reduced spending and paying all bills on time.
The easiest way to do that is to draw up a budget that realistically accounts for your income and expenses.
If youre not good at that, call a nonprofit credit counseling agency and get some free assistance from their professional certified counselors. Helping consumers come up with an affordable monthly budget is their specialty.
They can give you the benefit of their training and experience at drawing up monthly budgets, plus tips on how to make the bottom line come out in your favor every month.
If you get in the habit of paying bills on time, you will begin to , and youll regain favor with lenders and credit card companies. A few years of good practice and you and your creditors will forget this ever happened.
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What To Do After Your Bankruptcy Is Discharged
Once your bankruptcy is discharged, you should pull your credit reports from Equifax, Experian and TransUnion to confirm that your lenders are accurately reporting the discharge. Only the debts included in the bankruptcy filing should be reported as discharged. Also, double-check that all of those accounts included in the bankruptcy show a zero balance on your credit reports. After youve confirmed that your credit reports are accurate, you can then consider applying for a new credit card.
Even after your bankruptcy is discharged, it may take a while to qualify for a new credit card. Some credit card companies may reject your application simply because you have a recent bankruptcy on your credit report. Others may be less stringent because your risk of filing for bankruptcy again is low, since there are rules restricting when you can file for a second bankruptcy.
Wipe Out Credit Card Debt And Most Other Nonpriority Unsecured Debts
Bankruptcy is very good at wiping out unsecured , medical bills, overdue utility payments, personal loans, gym contracts. In fact, it can wipe out most nonpriority unsecured debts other than school loans.
The debt is unsecured if you didn’t promise to give back the purchased property if you didn’t pay the bill. By contrast, if you have a secured credit card, you’ll have to give the purchased item back. Jewelry, electronics, computers, furniture, and large appliances are often secured debts. You can find out by reading the receipt or credit contract.
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Heres What Happens If You Stop Paying:
- One payment missed: If you have a good borrowing history, your creditors may simply send you a polite reminder letter.
- Two payments missed: You will get a strongly worded letter, and possibly also a phone call, demanding payment.
- Three payments missed: Creditors may begin enlisting collection agencies to press you for payment. Collection agencies will make your life unpleasant, using a variety of pressure tactics to get the money.
If you still dont pay, stronger methods can be used, and the creditor or collection agency may take legal action against you. This can lead to wage garnishments or liens against property.
If your creditor is the Canada Revenue Agency , note that the CRA can proceed with liens or garnishments without having to take you to court first.
Your best bet to make things better is to act immediately. You may have more options than you think!
Why Should I Choose Debt Consolidation
You should choose credit card debt consolidation if:
- Theres no way you can pay off your in 12 to 18 months, even with a 0% interest rate card, simply because you have too much debt.
- You own a house that you could use as collateral for a loan. Owning a house will allow you to qualify for HELOC or a low-interest second mortgage.
- Youre qualified to receive a personal loan that makes the best financial sense for you.
- You can definitely afford to make monthly payments on a loan for 3 to 5 years.
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Will Applying For A Credit Card Hurt My Credit Score
When you apply for a credit card, issuers will check your credit report to see if you qualify. This check will be indicated on your report and may temporarily lower your score. This may feel like a catch-22 for people recovering from bankruptcy: you need a credit card to help repair your score, but applying for cards may actually hurt it. For this reason, we recommend you only apply to a secured card meant for people in your situation. That way, you’ll only need to apply once and you won’t have multiple credit checks listed on your report.
Consider A Debt Counseling Course
If either of those debt relief options are simply unattainable for you because your debt is too overwhelming or your credit score is too low, there are other options out there. You could undergo debt counseling with OBryan Law Offices or even file for bankruptcy. But most people want to avoid bankruptcy at all costs, understandably so.
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How To Get Out Of Debt: Bankruptcy And Alternatives To Bankruptcy
Cant pay your bills? Youre not alone. Many Canadians reach this point at one time or another in their lives. In 2018 alone, 125,266 Canadian consumers filed insolvency claims .
Thousands of consumers before you have experienced the following scenario: the bills get ahead of you and before long you are using lower interest credit cards to pay off your higher interest , and borrowing from one account to pay off another. Then one day you realize: Im in trouble and I need help figuring out how to get out of debt!
If You’re Considering Personal Bankruptcy Here Is How The Process Works
If your debts have become unmanageable or you’re facing foreclosure on your home, you might be thinking about declaring bankruptcy. While bankruptcy may be the only way out for some people, it also has serious consequences that are worth considering before you make any decisions. For example, bankruptcy will remain on your credit report for either seven or 10 years, depending on the type of bankruptcy. That can make it difficult to obtain a credit card, car loan, or mortgage in the future. It could also mean higher insurance rates and even affect your ability to get a job or rent an apartment. This article explains how bankruptcy works and also offers some alternatives to bankruptcy.
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Bankruptcy Filing Fees And Other Costs
Bankruptcy court fees depend largely on the kind of bankruptcy.
For both Chapter 7 and Chapter 13 bankruptcy, youll be responsible for paying fees just to have the bankruptcy court hear your case. These can include
- Filing fee The cost to file for Chapter 7 is $335, and $310 for Chapter 13.
- Credit counseling fee If you want to file for bankruptcy, youre required to receive credit counseling first. Many agencies charge a nominal fee for this service, which can cost around $50, according to the Federal Trade Commission. If you cant afford to pay, you may be able to get the fee waived.
- Additional fees You must take a debt education course after you file for bankruptcy in order to get a discharge. The cost can range from $50 to $100, according to the FTC. If you cant afford the fee, you may be able to get the provider to lower its fee or waive it completely.
Balance Transfer Credit Card
If you have credit card debt on a card with a high APR, try transferring the balance to a card that offers 0% intro APR. This lets you pay down the balance without being charged any interest.
Most of these special APR offers last between 12 and 20 months, depending on the cards terms. When the special offer is over, a regular interest rate will kick in, so its best to make as many payments as you can during the introductory period.
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Ways To Reduce Credit Card Debt
To get creditors to leave you alone when you are overdue on your credit cards, you can file for bankruptcy. Chapter 7 bankruptcy is one solution to stop creditor harassment and stop the collections process because the court implements an automatic stay once you file for bankruptcy. The stay prohibits creditors from contacting you about your credit card debt.
If creditors continue to harass you after you file for bankruptcy, we can help you pursue causes of action for violations of the Fair Debt Collection Practices Act and sue the creditors to stop them from bothering you. Under the Act, you may be entitled to damages for the distress caused by harassing creditors.
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
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Secured And Unsecured Debt
Most credit card debt is unsecured, meaning that there are no liens on the property you purchase with the credit card. Unsecured debt is usually discharged completely in Chapter 7 bankruptcy, but Chapter 13 bankruptcy may require you to pay a portion of what you owe. If you have a secured credit card, your creditors may have a lien on whatever you purchased. If this is the case, they can repossess these items for nonpayment even if you file for bankruptcy.
Will I Be Able To Get A Credit Card After Bankruptcy
Believe it or not yes. Creditor companies often send debtors offers for credit cards after they filed for bankruptcy knowing that it will be 8 years before they can file for bankruptcy again. Additionally, bankruptcy will illuminate all of your unsecured debt making your debt to income ratio more attractive to lenders who see that you now have the ability to take on new debt. This is not to say that filing for bankruptcy is good for your credit, because it is not. However, consumers emerging from bankruptcy commonly receive offers for cards in the mail very soon after their bankruptcy case has closed. For more information see: Can You Keep a Credit Card After Filing for Bankruptcy?
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What Is Chapter 7 Bankruptcy
Chapter 7 is known as the liquidation bankruptcy because it discharges most of your unsecured debt. That includes , medical bills and personal loans.
Its the quickest, simplest and most common type of bankruptcy. According to the American Bankruptcy Institute , 63% of the 774,940 bankruptcy cases filed in 2019, were Chapter 7.
An even more encouraging bankruptcy statistic: 94.3% of Chapter 7 filings had their debts discharged, meaning forgiven.
You must pass a means test to qualify for Chapter 7 filing. The bankruptcy means test examines financial records, including income, expenses, secured and unsecured debt to determine if your disposable income is below the median income for your state. The means test income level varies from state to state.
You might be forced to sell any non-exempt assets, though several online sites claim that 96% of Chapter 7 filings are no asset cases, meaning there is not enough equity or value in the property for a trustee to sell it and pay off creditors.
Generally, the Chapter 7 process can be completed in four to six months.
Can The Credit Card Companies Sue Me After I File For Bankruptcy
No. Once you file for bankruptcy protection, bankruptcy’s automatic stay prohibits most creditors from continuing collection efforts against you. The stay extends to credit card companies and prohibits them from suing you, sending you collection letters, calling you, or engaging in other collection activities. Learn more about bankruptcy’s automatic stay.
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Can Credit Card Companies Sue Me After I File For Bankruptcy
When you file for bankruptcy, the automatic stay protection goes into effect and prevents credit card companies from initiating or continuing a suit against you to collect money.
If the credit card company filed a debt collection lawsuit against you before you filed, and the case hasnt been settled the lawsuit cant proceed while the automatic stay is in effect, unless the bankruptcy court gives the card company permission.
If you do receive a discharge in Chapter 7, most often that will include discharge of judgments from debt collection lawsuits.
