Chapter 7 Vs Chapter 13
To file Chapter 7 bankruptcy, you must meet certain criteria.
For example, you cant have disposable income or even any liquidity. Your monthly income also must be lower than the median rate of whatever state you reside. If you dont meet these requirements, you cant get this type of bankruptcy.
Chapter 7 bankruptcy also can stay on your record longer than Chapter 13. So if your goal is to get rid of debt and recover from the bankruptcy as fast as possible, you do better with Chapter 13.
How Long Will A Bankruptcy Stay On My Credit Report
In general, a bankruptcy will stay on your for ten years. This report is the simple method for determining your , and it can even have an impact on whether or not you can be hired for certain jobs when you file a straightforward Chapter 7 bankruptcy. If you file for Chapter 13, agreeing to pay certain amounts of debt over a period of time, the bankruptcy usually stays on your credit report for seven years.
It has become increasingly more popular to screen potential employees by looking at their financial records. This is particularly the case when the employee might be handling large sums of money, but it may also hold true for other types of jobs. Though it may not be fair, bankruptcy can follow you for a long time.
This does not mean that you cannot get a job, purchase a home, rent an apartment, or even get a within a few years of bankruptcy, but financial experts warn those who are newly bankrupt to be very cautious about obtaining or using any new credit cards. In fact, it’s often best to pay in cash as much as possible for a few years.
You Can Use A Personal Loan For Almost Anything And The Money Can Help You When Youre In A Financial Bind But If You Recently Declared Bankruptcy It Could Be Difficult To Qualify For A New Loan At A Low Interest Rate
At some point, you might need to take out a personal loan maybe to maintain or repair your home or car. Getting a personal loan after bankruptcy may be difficult, but its not necessarily impossible. Some lenders offer no-credit-check loans, but those often have ultra-high interest rates or fees that can lead to a debt trap.
Bankruptcy might have wiped out some of your debt or allowed you to get on a more-affordable monthly payment plan with your creditors, and its sometimes the best financial option available. But you may still have debts to pay, like student loans or tax debt, and your daily bills will still be due.
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A Fresh Start After Bankruptcy
Mei Ling and Matt are a married couple who rent a flat in Gosford NSW. Both worked full time until two years ago when Matt lost his job. Mei Ling now works part time earning less than $40,000 per year.
For two years they tried to survive on Mei Lings wage, struggling to make repayments on their overdue credit cards and loans. They ended up with unsecured debts of over $65,000.
The only assets they owned were a car worth $5,000 and general household goods .
The pressure from their creditors became too much to handle. Debt collectors and process servers were constantly calling on them. Their electricity was turned off a few times and they stopped answering phone calls because it always seemed to be bad news. Matts health was also suffering and he was treated for depression. Most nights Mei Ling would end up in tears thinking about their situation.
They finally decided to see a financial counsellor. There was no charge for this service. The financial counsellor looked through their finances and suggested they consider filing for bankruptcy.
Matt and Mei Ling went home and looked in detail at the AFSA website. They read all about their options and the consequences of bankruptcy. The AFSA website showed that they would be able to keep their car because it was worth less than the set amount. They read they could also keep their household goods. In the end, they decided that bankruptcy would be the best option for them.
Keep Your Credit Utilization Ratio Low
Another key credit score factor is your it accounts for 30% of your FICO Score. Your credit utilization ratio measures how much of your credit you use versus how much you have available. For example, if your available credit is $10,000 and you use $2,000, your credit ratio is 20% .
Although its often recommended that you keep your ratio below 30%, you may be able to rebuild your credit faster by keeping it closer to 0%.
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Who Can Be Made Bankrupt
A bankruptcy order can be made for one of three reasons:
- you cant pay what you owe and want to declare yourself bankrupt
- your creditors apply to make you bankrupt because you owe them £5000 or more
- an insolvency practitioner makes you bankrupt because youve broken the terms of an individual voluntary arrangement
How To Build Credit After Bankruptcy
You can start rebuilding your credit score after the bankruptcy stay stops creditors from taking action. Bankruptcy will show on your record for 7-10 years, but every year you work to improve your credit, the less it will affect you and the financing you seek.
You need to wait 30 days after you receive the final discharge. This means most of your accounts will be at a zero balance, and creditors must stop calling you about debts.
To rebuild your credit score, you should:
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Can You Get Credit After A Bankruptcy
Myth: You cant get a credit card or loan after bankruptcy.
The truth: Credit cards are one of the best ways to build credit, and there are options out there for those with a checkered credit history. Secured credit cards, which require an upfront security deposit, have a lower barrier of entry but spend and build credit just like a traditional card.
Similarly, there are loans availablesuch as passbook, CD or that are secured with a deposit or collateral and help you build credit as you pay them off. Like secured credit cards, these loans are much easier to come by because the lender is protected in the event you cant pay. Do note that you may need to get permission from the court to take on new debt during a Chapter 13 repayment plan.
Understand What Bankruptcy Means
Unexpected or lengthy illnesses, sudden or prolonged unemployment, and many other factors beyond your control can plunge you into debt that you might struggle to recover from. Insurmountable debt can make it impossible to meet your daily needs and can also lead to persistent pressure and anxiety.
When that happens, you can file for one of many chapters of bankruptcy, which will allow you to greatly decrease or completely dismiss overwhelming debt. Bankruptcy protection is a federal process and cannot be filed or tried in a state court. Federal bankruptcy laws will allow you to begin the credit and finance journey over with a new start.
In addition to removing debt for consumers and businesses, bankruptcy also provides some measure of protection for creditors who might still recover a portion of the debt they are owed through restructured or reorganized debt payments. Your lawyer can help you choose the right bankruptcy chapter and filing to fit your specific financial needs.
For a legal consultation with a lawyer serving Rutherfordton, call
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What Is A Credit Report
Your is created the first time you apply for credit or borrow money. It will contain information such as details about your credit cards and loans, including when you opened your accounts, how much you owe, when you make or miss payments, and if you go over your credit limit. A credit report also contains personal information such as if you have ever filed for bankruptcy.
Equifax And Transunion Credit Reports
Both Equifax and TransUnion maintain a bankruptcy record on your credit report for a period from the date of your discharge or last payment.
For first-time bankrupts, TransUnion maintains the information for the maximum length of time permitted by provincial law , while Equifax retains the information for 6 years for every province.
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How Long Does A Chapter 7 Bankruptcy Stay On Your Credit Report
After you file for a Chapter 7 bankruptcy, it remains on your for up to ten years and youre allowed to discharge some or all of your debts. When you discharge your debts, a lender cant collect the debt and youre no longer responsible for repaying it.
If a discharged debt was reported as delinquent before you filed for bankruptcy, it will fall off of your credit report seven years from the date of delinquency. However, if a debt wasnt reported delinquent before you filed for bankruptcy, it will be removed seven years from the date you filed.
How Does Bankruptcy Affect Your Credit Rating
Bankruptcy is likely to drop your credit score to the lowest possible rating at most Canadian credit bureaus. That means lenders, insurers, landlords, employers, and utility companies are less likely to extend you credit upon completion of your bankruptcy, but there are ways to rebuild your credit. To learn more about rebuilding your credit, please see .
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What Is Credit Reporting And How Does It Affect Me
In Canada there are two major credit reporting agencies Equifax and TransUnion. Most people commonly refer to these agencies as the credit bureaus. Credit reporting agencies do exactly that: they report credit history. They can also be referred to as an information service as they provide copies of your credit report to potential lenders. This allows the banks and other lenders to determine how much risk they are taking when they loan you money. Whenever anyone lends money they are taking a risk that it will not be repaid.
To get any significant credit, you need a good borrowing history.
Approximately once each month every major lender in Canada sends a report about their borrowers to the credit bureaus. Also, the federal Superintendent of Bankruptcy reports a list of everyone who filed a consumer proposal or bankruptcy to the credit bureaus, as well as a list of everyone who has been discharged. The credit bureaus collect this information, summarize it, and sell it to their members, the lenders.
When you apply for credit you normally sign an application that provides the lender consent to access your credit history. Generally this consent allows then access not only the first time you apply, but anytime afterwards as well, as long as your account is open. It is also this consent that allows the lender to provide the bureau information on your payments etc. once you have been approved.
How Long Does Bankruptcy Stay On Your Credit Report
A Chapter 7 bankruptcy stays on your credit report for ten years after your filing date. A Chapter 13 bankruptcy gets removed after seven years because debtors repay at least some of their debt. While the bankruptcy information remains on your credit report, anyone who pulls your credit can learn of your filing. So an employer or credit provider that doesn’t directly ask you about previous bankruptcies on your application can find out through a credit check.
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Is Your Credit Rating Really Worth Stressing About
Are you current on all your debt payments? Yes? No? Maybe?
If youâre behind on any debt payments, your credit score could probably be better. So, rather than worrying about possibly making your already bad credit worse, think about how a bankruptcy discharge could help you build credit.
So, what happens to my credit score if I file bankruptcy?
Like all negative information reported to the credit credit bureaus, filing any type of bankruptcy will have a negative impact on your credit score. Since a bankruptcy filing is public record, they will find out, even if theyâre not directly notified by the bankruptcy court.
But, unlike other things that have a negative effect on your FICO score, a bankruptcy filing is often the first step to building a good credit score.
Bankruptcy Information Can Be Wrong
You may want to hire a credit repair attorney if your record shows inaccurate financial or bankruptcy information. They can speak with credit reporting agencies, credit card companies, or credit card issuers if you are having personal finance trouble. An attorney can also step in if a company does not discharge your debt correctly or you fall into a credit counseling scam.
Remember: A bankruptcy discharge legally stops creditors from harassing you. You have rights if a company is not following the process or respecting your bankruptcy filing.
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Records Against Property You Own
To remove the record of your bankruptcy from the Land Charges Register you must do both these things:
- fill in Land Charges form K11 on GOV.UK – theres a £1 charge for each entry you want to cancel
Bankruptcy entries are automatically removed from the Land Charges register after 5 years if theyre not renewed. Find out more about what happens when bankruptcy ends on GOV.UK.
How To Remove A Public Record From Your Credit Report
If youre struggling with how to remove a public record from your credit report, you need the experienced bankruptcy attorneys at OBryan Law Offices. Public judgments from courts about one or more of your debts can have you ending up with an entry on your credit report. While they are difficult to remove, it is not an impossible feat. With the help of a knowledgeable Kentucky bankruptcy attorney, youll be back on your feet in no time. For more information on how to remove a public record from your credit report, call our office at for your free consultation. We also offer debt counseling in Kentucky for those who are unsure what to do next.
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Will A High Credit Score Help You During A Bankruptcy
Myth: A clean credit historyone with no late payments or other issuesand a high credit score means youll be less impacted by a bankruptcy.
The truth: Bankruptcy will have a huge negative impact on your credit, and a previously positive payment history doesnt change that. In fact, if you have a higher score, you could stand to lose more than if you already have a low score.
A bankruptcy also temporarily wipes out all the goodwill you might have developed with your timely payments. Some lenders may have rules about offering credit when a recent bankruptcy shows up on your credit historyno matter how good your score used to be.
How Long Does Chapter 7 Bankruptcy Stay On Your Record
Contrary to the pervasive myth that bankruptcy will destroy your credit, bankruptcy can actually provide the much-needed financial relief that, in the long term, allows the filer to begin building good credit once again. However, while a Chapter 7 or liquidation bankruptcy can empower you to strengthen your credit in the future, it will have some immediate effects upon your credit score for which you need to be prepared. Our Folsom Chapter 7 bankruptcy lawyers will explain how long a Chapter 7 bankruptcy stays on your credit report, and discuss the possible effects on your ability to obtain loans. You may be pleasantly surprised by some of the information.
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The Damage To Your Credit And Recovering From It
Even more important than the timeframe is the potential damage that a bankruptcy record can do. So many people worry that theyll never be capable of restoring their good rating or qualifying for a loan in the future. Such worries are unjustified.
After talking to a bankruptcy attorney, youll find out that a bankruptcy is very often a much better idea than keeping on accumulating debt. Your inability to make timely loan payments will have a much more devastating impact on your credit history than the bankruptcy record.
Initially, your credit history will deteriorate profoundly as a result of the bankruptcy filing. The journey towards recovery, however, doesnt have to be a lengthy and difficult one.
All individuals go through pre-discharge credit counseling during the bankruptcy process. The information obtained during the sessions is great for building financial stability and beginning the recovery process immediately after the discharge.
The first thing to do is to check ones free annual credit report. Examine all of the information appearing there. There could be some mistakes or inaccurate entries. These will need to be addressed because theyll add to the burden of the bad credit score.
Co-signed credit cards are another option. While these are great for rebuilding your score, you will need to have a friend or a family member willing to vouch for you.