What Happens To Your Credit Score
Your will fall because of filing bankruptcy however, this is temporary. The information about your bankruptcy will remain on your report for six to seven years for a first bankruptcy, but this does not mean you have to wait that long to get new credit.
Depending on the reasons you filed, and what your payment history looked like before your bankruptcy, some creditors will offer an existing bankrupt person a credit card. It is almost always possible to get a secured credit card even while bankrupt. Getting new credit is your chance to build a new credit history and show future creditors that you can handle credit wisely.
Many people opt to file a consumer proposal since a consumer proposal can be better for your credit report.
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
Your Responsibilities When A Bankruptcy Order Is Made
- give the official receiver information on your finances
- give the official receiver a full list of your assets
- tell your trustee about any rise in income during your bankruptcy
- tell anyone who offers to loan you over £500 that youre bankrupt
- go to court to explain why you owe money if asked to do so
There are also things you cant do while bankrupt. These are called restrictions.
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How Do I Start The Bankruptcy Process
A good place to start is to get a free copy of your credit report, which you are able to do once per year. Keep in mind that not all of your debts will be listed on the report. Tax debts, medical bills, utility bills and some loans will not be included.
You will also need to secure copies of:
Chapter 7 Vs Chapter 13 Bankruptcy: Whats The Difference
Its important to note the differences between Chapter 7 and Chapter 13 bankruptcy before we discuss how often consumers can file for this type of protection.
Chapter 7 bankruptcy is a process that helps consumers liquidate their assets and pay off delinquent debts. While Chapter 7 bankruptcy allows consumers to keep some of their personal assets up to certain limits, consumers typically choose this type of bankruptcy when they dont have many assets to protect. Chapter 7 bankruptcy can take three to six months to complete, but it does allow consumers to discharge delinquent debts and get a fresh start.
With Chapter 13 bankruptcy, consumer debts are restructured instead of discharged. Families and couples typically choose this type of bankruptcy because they have assets to protect, such as significant equity in their home. Once the Chapter 13 bankruptcy process begins, a court-approved debt repayment plan is set up and followed over three to five years. At the end of Chapter 13 bankruptcy, consumers will have been able to keep all their property and pay off unsecured debts included in their bankruptcy.
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What Happens If You File Bankruptcy Under Chapter 11
Under Chapter 11, the bankruptcy court approves a collection plan that provides for full or partial payment of the debt, depending on the priority and nature of the debt. Chapter 12 is designed to enable family farmers to pay off their debts with future income over a period of time. This is a lot like registering for Chapter 13.
Can You File For Bankruptcy Twice
You may have filed for bankruptcy in the past and may find yourself in a situation where you need to file a second time, but dont know if you can or not. The good newsis that there is no limit on how many times you can file for bankruptcy. There is just a limit on how long you must wait before you can file a second time.
No matter if this is your second or even fourth time filing for bankruptcy, you must know the time limit and restrictions you will face. The Ohio bankruptcy lawyers of Bates& Hausen, LLC have years of experience helping people in your situation.
If you need help in filing for bankruptcy, you can speak with someone now at our Akron office by calling 678-0626.
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Start Gathering A Mountain Of Documentation
When you decide to file for bankruptcy and choose a good attorney to help you, theyre going to need an extensive amount of information from you in order to determine which type of bankruptcy you should file. You can get a jump-start when you plan for bankruptcy by starting on the following list of items that will probably be asked of you in the bankruptcy attorneys intake process:
Mortgage Information: Youll need to provide details about each mortgage and home equity line or loan you hold and the relevant properties.
Bank Accounts: For each and every bank account youll need to provide specific information about the bank, the type of account , the account number and balance for each account.
Vehicles : You will need to describe all your vehicles, along with details on any financing you have on them.
Other Assets: Youll have to make a list of any and all life insurance policies , along with cash value if any, as well as all Pensions, annuities, 401K plans, 403 B plans, and so on, with complete address and account numbers for each.
Taxes Owed: List all taxes owed to government, including the IRS, state, city or town
Court-Ordered Obligations: Collect all the details related to any child support, alimony, amounts and arrearages, and court ordered property settlements from a divorce, and any wages owed to employee if applicable .
Your Trustee May Sell Your Assets
You are able to keep:
- ordinary household goods
- tools up to a set amount used to earn an income and
- vehicle with a value up to a set amount.
Your trustee can sell other assets including your house and property. You must not dispose of any property belonging to the trustee. You must declare any assets you have when you apply for bankruptcy and any you receive during bankruptcy.
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What Happens After Bankruptcy
Once your bankruptcy is finished, you will receive your discharge certificate. This is the bankruptcy step that releases your obligation to pay back your remaining debts.
Will you ever get credit again? The answer is yes.
You can apply for credit immediately after filing bankruptcy you are, however, required to state that you are an active bankrupt if you apply for credit of $1,000 or more. Many people can get a secured credit card and car loan soon after filing. At this stage, your income and past payment history will be the most significant factors in determining if you qualify for new credit. Your interest rate will be high initially, but you can take steps to rebuild your credit and well help you with that.
Most people feel relief as soon as they declare bankruptcy. The advantages of bankruptcy outweigh the downsides for anyone struggling with significant debts:
- Collection agencies stop calling
- You no longer have to juggle debt payments
- You can begin to save money as a result of eliminating all that high-interest debt
- Your credit improves if you follow the right steps because you no longer have the negative factor of high debt utilization on your credit report.
We recommend monitoring your credit report to ensure your creditors report your debts accurately . You should submit a dispute resolution if creditors have made mistakes in their reporting to the credit bureaus.
Waiting Period For Subsequent Chapter 13 Cases
The waiting period for Chapter 13 debtors who want to receive a discharge in the second or subsequent case is shorter. A bankruptcy court may not grant a discharge in a Chapter 13 case if the debtor:
- Received a discharge in a Chapter 7 or Chapter 11 bankruptcy case filed within the four-year period preceding filing of the current case, or
- Received a discharge in a Chapter 13 case filed within the two years before filing of the current case
Note that the lock-out period relating to a prior Chapter 13 case rarely comes into play, since a successful Chapter 13 case typically takes three to five years to complete. There generally isnt enough time to file a Chapter 13 case, receive a discharge, and then file again within two years. Some exceptions would be when the debtor received a hardship discharge or paid the previous case out early.
A debtor who is not eligible for discharge based on these limitations may still be able to use the Chapter 13 bankruptcy process to break up delinquent debt into manageable payments across a three to five year plan.
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What Happens To Your Bank Account
When the bankruptcy order is made, you must:
- make sure you dont use your bank account
- give your cards and cheque books to the trustee
Your bank account will be frozen. Any money in your account will be an asset and claimed by the trustee. The trustee can ask to release some money:
- for your daily living needs
- to the other person in a joint account
The bank is allowed to use money from one of your accounts to pay your debts on another account you hold with them. This is called set off.
Otherwise, money owed to the bank is a bankruptcy debt, so you cant pay this to the bank directly. The exception is if the bank has a charge on your home .
Open a new account
You can open a new bank account after the date of the bankruptcy order but you must tell the bank or building society that youre bankrupt. Some banks will let you use your old account after theyve spoken to the trustee.
Recovery Steps After Chapter 7 Bankruptcy
The day your Chapter 7 bankruptcy is discharged is a wonderful day. The process is over. Most or all of your qualifying unsecured debts have literally been wiped away. Youve got a clean slate and can now make the fresh start bankruptcy laws were intended to provide. So now what? What specific things can you do to rebuild and restore your credit so you can begin to build up some real financial strength moving forward? This article will outline a number of Chapter 7 bankruptcy recovery steps you can take. But make sure you have realistic expectations. Recovering from bankruptcy will take at least several years. You have to be patient and keep working on it to make progress, but you can do it.
Consequences Of Filing Bankruptcy More Than Once
There are, however, implications and consequences of filing bankruptcy more than one time.
One of the most serious implications of a second bankruptcy is that you will be bankrupt for a longer period of time. The first time you file bankruptcy you are eligible to be automatically discharged from bankruptcy in nine months . In a second bankruptcy the length of bankruptcy increases to a minimum of two years, and increases to three years if you have surplus income.
A second bankruptcy will also have an impact on your credit report. The major credit reporting agencies in Canada generally report a first bankruptcy for six or seven years after the date of discharge. A second bankruptcy can remain on your credit report for up to 14 years, or twice as long as a first bankruptcy. That can negatively impact your ability to borrow in the future.
How often can you file bankruptcy? It is possible to file bankruptcy for a third time, but if you do you will be required to attend a discharge hearing in bankruptcy court. You will be required to explain to the judge why you filed bankruptcy three times, and it will be up to the court to decide if and when you get discharged. The court could impose conditions on your discharge, such as holding your bankruptcy open for an extended period of time, or requiring you to make additional payments. A third bankruptcy is something to avoid.
What Happens To Your Spouses Credit Or Assets
If your debts are your own, your spouse is not affected by your bankruptcy. Your bankruptcy does not appear on their credit report.
If you have joint debt, your creditor will pursue your spouse for collection. In this case, you may want to talk to your trustee about a joint bankruptcy.
Only your share of any assets you own is included in your bankruptcy. If you own any assets jointly, such as a marital home, it is essential to discuss options with your trustee. Again, a consumer proposal may be a more viable alternative in this scenario.
If your spouse, or anyone, co-signed a loan for you, they are still liable for repayment of any debts forgiven to you in your bankruptcy.
What Happens To Your Business
If youre self-employed, your business will be closed. Any business assets will be claimed by the trustee.
Your employees may make a claim for unpaid wages and holiday pay, payment in place of notice, and redundancy. Theyll make this claim to the National Insurance Fund, or the money may be claimed in the bankruptcy process.
You can start trading again, but youll have to follow certain rules.
Your Debts Are Business Related Not Personal
Note that if your business is a sole proprietorship, then theres no difference between business debt and personal debttheyre considered one and the same. However, if your business has been properly set up as a corporation or limited liability company and none of the business debt has been personally guaranteed by you, the creditors will have to be satisfied with the assets of the business and cannot go after you personally. This opens up the possibility that bankruptcy is not a good idea in this specific situation. Be sure to go over the details of your business and its debts with your bankruptcy attorney before deciding on a course of action!
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Your Interview With The Official Receiver
If your bankruptcy is approved, youll have an interview with the official receiver. If youve presented your own bankruptcy petition, this may happen directly after the bankruptcy order is made. Alternatively, your letter from the official receiver may invite you to an interview either in person or by telephone. If offered a telephone interview you can ask to be interviewed in person if you prefer.
If you have been made bankrupt by one of your creditors the official receiver may also contact you by telephone to find out if there is anything that needs to be sorted out urgently.
You must attend the interview and cooperate with the official receiver. If you dont, your bankruptcy could be extended beyond the normal 12 months and you could face an examination in court. The more organised you are, the more straightforward the process will be.
Before the interview, telephone the official receiver to confirm or rearrange the appointment let them know if:
- you require special facilities
- there is anything that needs to be sorted out urgently
- you need more time to gather the paperwork for the meeting
If you have been sent a questionnaire, fill it in, noting anything you dont understand .
Collect together all the paperwork you have been asked to take to the interview or have with you during the telephone call.
Face-to-face interviews may take 2 to 3 hours.
After you arrive:
Telephone interviews take at least 30 minutes.
The examiner will:
Get Advice From A Qualified Bankruptcy Attorney
The first thing we always want to make clear is that while we understand a lot about bankruptcy because of what we do to help customers get bankruptcy car loans, we are not bankruptcy lawyers. The first place to start when youre wondering if you should file bankruptcy is by seeking the advice of a qualified, reputable bankruptcy attorney. In the San Diego area, were happy to recommend several on our attorneys page. And if you want additional guidance, check out our previous article, Choosing a Bankruptcy Lawyer. A qualified bankruptcy attorney can help you understand whether or not filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy is the best choice for your specific situation.
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How Many Years Can I Have Between Bankruptcies
How old can I be between bankruptcies? First filing Required second filing date Chapter 7 Chapter 7 8 years from date of first filing Chapter 7 Chapter 13 4 years from date of first filing Chapter 13 Chapter 13 2 years from date of first filing Chapter 13 Chapter 7 6 years from the date of the first presentation