What Is The Average Credit Score After Chapter 7
The average credit score after bankruptcy is about 530, based on VantageScore data. In general, bankruptcy can cause a persons credit score to drop between 150 points and 240 points. You can check out WalletHubs credit score simulator to get a better idea of how much your score will change due to bankruptcy.
Debt collectors cannot try to collect on debts that were discharged in bankruptcy. Also, if you file for bankruptcy, debt collectors are not allowed to continue collection activities while the bankruptcy case is pending in court.
How The Homestead Exemption Works In Florida Chapter 7 Bankruptcy
The Florida Constitution exempts a Florida homestead of unlimited value from liens and execution. A debtor may protect unlimited amounts of money invested in a homestead property. A debtor may invest money into an exempt homestead even after being sued. These homestead rules apply in state court collection proceedings. Bankruptcy law does not affect Floridas unlimited homestead exemption in state court proceedings.
But bankruptcy law is a federal law, and federal law may supersede state law in certain cases. The Florida homestead exemption is applied differently in a Chapter 7 bankruptcy than in Florida state court.
There are some value ceilings and purchase deadlines applicable to Floridas homestead exemption in Chapter 7 bankruptcy. Under federal bankruptcy law, the debtors Florida homestead is exempt up to a value of approximately $160,000 unless the debtor occupied his current Florida homestead property and previous Florida homestead properties for a continuous 40-month period prior to filing bankruptcy. Joint bankruptcy debtors can protect approximately $320,000 of a jointly owned homestead. These numbers increase from time to time, so debtors should get the current limits from their bankruptcy attorney. Chapter 7 bankruptcy debtors are entitled to an unlimited homestead exemption if they have occupied their Florida homestead for more than 40 months prior to filing.
How Long Is Chapter 7 Bankruptcy
The decision to file for bankruptcy may be the best option when you are going through financial hardship. When a Chapter 7 filing is completed, it can help with your credit and debt by getting rid of all unsecured debts like medical bills or student loans that have gone unpaid because they were too expensive to pay back. The attorneys at OBryan Law Offices in Kentucky will work closely with you as we start fresh together. To discuss your options with a qualified and knowledgeable attorney, call today.
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Complaints Seeking Revocation Of Discharge Will Require Retaining Counsel
Keep in mind that the mere filing of an adversary proceeding seeking to revoke the discharge will require hiring an attorney to answer the allegations of improper conduct. If these allegations are not addressed in a timely fashion, the debtor will lose their discharge by default.
The possibility that a bankruptcy discharge can be revoked highlights the importance of full disclosure to your bankruptcy attorney. You must inform your bankruptcy attorney of all assets and debts in order to ensure that your discharge is not subsequently challenged.
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What Happens On The Day The Case Is Filed
The day you submit your bankruptcy forms to the court, sometimes called the filing date or the petition date, sets a few things in motion. For one, the automatic stay is triggered. This stops creditors from trying to collect a debt from you and even stops a garnishment. First, the clerkâs office assigns a case number, a judge, and a bankruptcy trustee to the case. Then it schedules the 341 meeting of creditors. The date of the 341 meeting determines a number of important deadlines for the bankruptcy case.
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Consider Applying For A Secured Credit Card
After filing for bankruptcy, its unlikely that you will qualify for a traditional credit card. However, you may qualify for a secured credit card. A secured credit card is a credit card that requires a security depositthis deposit establishes your credit limit.
As you repay your balance, the credit card issuer usually reports your payments to the three credit bureaus. Repaying your balance on time can help you build credit. Once you cancel the card, a credit card provider typically issues you a refund for your deposit.
When shopping for secured credit cards, compare annual fees, minimum deposit amounts and interest rates to secure the best deal.
Is Chapter 7 Bankruptcy Right For You
Make sure you know the difference between Chapter 7 bankruptcy vs Chapter 13 bankruptcy. Chapter 7 makes sense when:
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You dont have many assets.
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Your problem debts total more than 50% of your annual income.
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Your problem debts can be discharged, or forgiven, by Chapter 7. These include debts such as medical bills, credit card debt and personal or payday loans.
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It would take five years or more to pay off your debt, even if you took extreme measures.
Some debts typically cant be erased in bankruptcy, including recent taxes, child support and student loans. Bankruptcy still may be an option for you, though, if erasing other kinds of debt would free up enough money to pay the debts that cant be erased.
The other common form of consumer bankruptcy, Chapter 13, may be better if you have more assets or secured debts, and can repay some or all of what you owe.
Other debt relief options are available, too, such as a debt management plan through a agency. Take advantage of the free initial advice that credit counselors and many bankruptcy attorneys offer before deciding on a path.
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Appointment Of Bankruptcy Trustee
Once your case is filed you are appointed a bankruptcy trustee. They handle the paperwork, questions, and monitor your case from beginning to end.
Your trustee must, by law, make you aware of the possible bad outcomes that can happen. They should tell you that:
- You cannot file Chapter 13 for four years
- Your credit score will decline after the bankruptcy discharge
- Reaffirming a debt has consequences
You will be told about these risks at or before the meeting of the creditors . Ask questions if you do not understand one of the topics.
How Long Does A Chapter 13 Bankruptcy Stay On Your Credit Report
A Chapter 13 bankruptcy stays on your credit reports for up to seven years. Unlike Chapter 7 Bankruptcy, filing for Chapter 13 bankruptcy involves creating a three- to five-year repayment plan for some or all of your debts. After you complete the repayment plan, debts included in the plan are discharged.
If some of your discharged debts were delinquent before filing for this type of bankruptcy, it would fall off your credit report seven years from the date of delinquency. All other discharged debts will fall off of your report at the same time your Chapter 13 bankruptcy falls off.
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Can You Remove A Bankruptcy On Your Own
Like all negative item disputes, its entirely possible to complete the process on your own. However, removing a bankruptcy from your credit report early can be a lengthy and tedious process that doesnt guarantee results.
You can dispute the bankruptcy either by stating an inaccuracy of the information on your credit report or by asking the credit bureau how it verified your bankruptcy. As with any dispute, they must respond to your procedural request letter within 30 days.
In most cases, theyll say that they verified it with the courts, but this is unlikely. You must then contact the court to ask how they verified your bankruptcy.
If they respond that they never verified it, you should get that statement in writing, send it to the credit bureau, and ask them to remove the bankruptcy.
This method isnt guaranteed, but it might be worth trying. Otherwise, enlist the help of a credit repair company to navigate the process for you.
Credit repair companies are highly experienced at disputing negative items on your credit reports. They specialize in getting bankruptcies deleted from your credit report. They also work to remove other negative information included in the bankruptcy, like charge offs and collections.
Monitoring Your Credit Report
Also, itâs essential to examine your credit report for mistakes after your discharge. If you notice an error, correct it promptly so that it doesnât derail your efforts to rebuild your credit. You can check your credit report for free using annualcreditreport.com . Youâre entitled to one free copy per year from each of the three reporting agencies. Requesting a report from one of the three agencies every four months is an excellent way to keep track of changes. Also, all of the three reporting agencies allow you to file a dispute online.
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Can I Remove A Legitimate Chapter 7 Or 13 Bankruptcy From My Credit Report Early
You can, but youll need to find an error or inconsistency in the bankruptcy listing on your report in order to file for removal.
The main thing to remember is that you always have the right to challenge anything that the credit bureaus are reporting.
If you can find anything thats not correct, then seize on it as an opportunity.
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Why It Might Take Longer To Complete Your Chapter 7 Bankruptcy
Even though in most cases, the court grants a discharge and closes the case in less than five months, things don’t always go that smoothly. How long the delay might take will depend on the type of problem involved.
- Short delay. If you don’t provide information when you should, but you correct the problem quickly, both your discharge and the closure of your case will be delayed briefly .
- Moderate to long delay. If a property issue exists, you’ll likely receive your discharge promptly but your case will remain open while the property issue gets resolved. The length of the delay usually depends on the complexity of the dispute or length of time it takes the trustee to sell the property.
- Long delay. If there’s a question about whether you should receive a discharge, you’ll likely be involved in a bankruptcy lawsuit. Both your discharge and the closure of your case could be delayed by six months to a year.
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Chapter 7 Bankruptcy Timeline
The Chapter 7 bankruptcy process has many steps. Your obligation includes gathering information required by the court and the trustee, taking a credit counseling course, paying a filing fee, which sets the court process in motion, attending a meeting with creditors, and more. The judge could discharge your debt once all that happens.
Most cases follow the same basic timeline.
Normally, the process takes about four months, Cibik said. Once you file your Chapter 7 bankruptcy, the meeting of creditors with the Chapter 7 trustee is approximately 30-45 days later. Then, the court waits 60 days to see if any creditors object to your Chapter 7 bankruptcy. If no objection, it takes about another 15 days to close out the case and get your Chapter 7 discharge of debt.
Is My Credit Going To Be Bad As Long As A Bankruptcy Shows Up
Myth: You might as well not even try because youll have poor or bad credit as long as the bankruptcy is on your record.
The truth: Yes, bankruptcy tanks your credit score in the short term. But how much a bankruptcy impacts your credit score depends in part on how old the record is. Like many other types of items reported on your credit file, bankruptcies lose some power over time. Thats especially true if you start managing credit and debt in a more positive way while youre waiting for the bankruptcy to fall off your report.
Some ways to help positively impact your score after bankruptcy can include:
- Adding new credit, such as secured credit cards or small installment loans, to offset the negative information on your credit report.
- Making on-time payments for all debt, new and old.
- Keeping your credit card balances under 30% utilization.
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How Long Does Information Stay On My Equifax Credit Report
The length of time information remains on your Equifax credit report is shown below: Active credit accounts that are paid as agreed remain on your Equifax credit report as long as the account is open and the lender is reporting it. Closed accounts reported by the lender as paid as agreed can stay on your Equifax credit report for up to 10 years from the date it was reported by the lender to Equifax. Accounts not paid as agreed can remain on your Equifax credit report for up to 7 years. Late Payments Remain on your Equifax credit report for up to 7 years from the original delinquency date the date of the missed payment. The late payment remains even if you pay the past-due balance. Collection Accounts Remain on your Equifax credit report for up to 7 years from the date of the first missed payment. The account remains on your Equifax credit report even if you pay the collection account. Bankruptcy
- Chapter 7 or 11 filed and discharged status bankruptcies remain for 10 years from the date filed
- Chapter 12 and 13 bankruptcies remain for 7 years from the date filed
- Dismissed bankruptcies remain for 7 years from the date filed
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When You Have A Hassle
In most cases, filing for Chapter 7 should be straightforward and hassle-free. In those cases, you can anticipate the process lasting less than five months. During the process, you can anticipate a meeting of creditors hearing, supplying any and all additional information needed, taking the financial management course, and then finally, being discharged of your debts.
However, when things get complicated, time may be added to your process along with additional steps.
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Alternatives To Chapter 7
Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707.
Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.
What Is Chapter 7 Bankruptcy
Chapter 7 bankruptcy is called liquidation bankruptcy, because, in theory, a persons assets are liquidated to pay their unsecured debt. In reality, most people who file Chapter 7 get to keep their house, car and other necessary assets, as long as they stay current on payments.
Before you can file Chapter 7 bankruptcy, you must pass a means test, which shows that you dont have the means to pay your unsecured debt. That would mean things like credit cards, medical bills and personal loans debt that isnt tied to collateral like a house or car. The majority of people who filed bankruptcy in 2020 cited the problem as consumer debt, which is debt caused by buying things, much of it credit card debt.
While some assets are sold to pay back that debt, you get a break through state and federal exemptions that allow homes and cars up to a certain value to not count. The amounts vary, depending on where you live, but most people who file dont have to give up those assets. Things like home furnishings, tools needed for work and other essential property is protected. Things thar arent protected are luxury items, like jewelry, coin collections, second homes, hobby cars, as well as insurance policies, bank accounts, inheritances and money from lawsuits.
It cant be used to discharge federal student loans, alimony or child support or tax debt.
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Speak With An Experienced Bankruptcy Attorney Today
If you are about to begin the process of filing for bankruptcy, reach out to the skilled legal team at the Law Offices of Marshall D. Schultz. We have over 45 years of experience and will help ensure you are able to successfully file for a Chapter 7 bankruptcy, so you can begin working toward a brighter financial future.
Contact our team today at 822-6730 to schedule a free case review.
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How Long Does It Take For Chapter 7 To Be Discharged
As we stated before, the bankruptcy discharge occurs around 2 months after the creditor meeting. However, certain actions sometimes delay or prevent the discharge. For example, if you fail to complete your budget counseling course, the court cannot grant the discharge. Additionally, if you wait too long, the court might close your case. Below, we include other factors that delay a discharge.
- Someone objects to your discharge. Sometimes, creditors submit written objections to the court. In many cases, they do this if you used a credit card or took on new debts too close to filing for bankruptcy. Trustees also have the ability to object or request a delay. Usually, they do this if you do not provide them with the appropriate information.
- The court schedules a reaffirmation hearing. The US Bankruptcy Code requires the court to both review and approve all reaffirmation agreements not signed by a bankruptcy attorney. Because hearings happened based on the judges availability, hearings sometimes do not happen until after the objection period has passed. Even so, the court cannot grant the discharge until this hearing happens.
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