Lets Take A Look At A Few Tips:
Keep your balance at zero. Carrying a balance on your credit card is what credit card lenders want. Credit cards that have a balance incur interest charges and when credit cards incur interest charges credit card lenders make money. If you want to win the credit card game, make sure that you pay off your balance every month.
Avoid paying any fees. Many credit card lenders with annual fees and other fees target borrowers just out of bankruptcy. Unfortunately, many of these fees can add up to hundreds of dollars per year. Protect your future income by only applying for credit cards that do not have annual fees.
After a year or so of paying on your credit card successfully, talk to your lender about lowering your interest rate. Even if you never carry a balance, you never know when you may need to carry a balance for a month or two in the future. Its better to have a lower interest rate that will save you hundreds of dollars a year.As we said in our first tip, dont keep a balance on your credit card. However, if you are forced to carry a balance make sure that you pay more than the minimum payment required. Paying the minimum payment required will leave you in debt for years and have you paying sometimes double or more in interest charges over the life of the loan.
Chapter 7 Bankruptcy And Credit Card Debt
When you file for Chapter 7, most of your debt can be discharged. However, Chapter 7 requires you to give up all of your non-exempt property. The trustee will sell the property and use the money to pay off creditors. Most credit card debt is viewed as non-priority, unsecured debt, so its discharged with Chapter 7. Tax debts and child support are two examples of priority debts, which cannot be discharged with Chapter 7 bankruptcy.
Although it doesnt make sense in most situations, its possible to file for Chapter 7 and reaffirm all debts except for credit card debt. In this situation, an individual is liable for reaffirmed debts when the bankruptcy is finished.
Are You Considering Filing For Bankruptcy We Can Help
Being unable to meet your expenses or facing lawsuits for unfulfilled financial obligations is a tough situation to be in and one that you think you cant get out of. Bankruptcy Canada understands your predicament and is committed to helping you resolve your debt issues.
If youre looking for an effective debt relief solution that is best for your financial situation, Bankruptcy Canada can help. Our knowledgeable and highly experienced Licensed Insolvency Trustees will thoroughly evaluate your financial condition and recommend a solution that will best meet your needs. Meanwhile, also feel free to go through our extensive database of relevant articles to find the answers youre looking for.
To consider your options and take the next step towards debt relief, contact us by submitting a short form and one of our Licensed Insolvency Trustees will get in touch with you within 24 hours.
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Am I Allowed To Have A Bank Account If I Declare Bankruptcy In Canada
If you have more than $999 in your account and want overdraft protection, you must notify your bank that you are bankrupt. In order to prevent creditors from taking money from you, it is recommended that you open a bank account at an institution where you do not owe money. Only use your new bank account and do not use any accounts that were active prior to your bankruptcy.
What Happens After Bankruptcy
Once your bankruptcy is discharged your debts will be cancelled . A note about your bankruptcy will remain on your credit report for a minimum of six years after the date of discharge. In most circumstances, your bankruptcy will be discharged in 9 months.
This means that for most people their debts are cancelled 9 months after filing for bankruptcy and they can start going through the process of rebuilding their credit. Your trustee can help you here as well by providing effective strategies for getting your credit back on track and helping you manage your money.
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How Do You File Chapter 7 Bankruptcy
You can probably complete the process within six months. You’ll have to follow several steps.
You must complete pre-file bankruptcy counseling from a qualified nonprofit credit counseling agency within 180 days before filing.
Find an attorney:Before diving into the various forms required to file Chapter 7, find a qualified bankruptcy attorney to help. Its hard to find money for a lawyer when you need debt relief, but this is not a DIY situation. Missing or improperly completed paperwork can lead to your case being thrown out or not having some debts dismissed.
File paperwork: Your attorney will help with filing your petition and other paperwork. But its on you to gather all relevant documentation of your assets, income and debts. An automatic stay goes into effect at this point, meaning that most creditors cannot sue you, garnish your wages or contact you for payment.
Trustee takes over: Once your petition is filed, a court-appointed bankruptcy trustee will begin managing the process.
Meeting of creditors: The trustee will arrange a meeting between you, your lawyer and your creditors. Youll have to answer questions from the trustee and creditors about your bankruptcy forms and finances.
Your eligibility is determined: After reviewing your paperwork, the trustee will confirm whether youre eligible for Chapter 7.
Education course: Before your case is discharged, youll have to take a financial education course from a qualified nonprofit credit counseling agency.
How To Rebuild Your Credit After Bankruptcy
The credit reporting bureaus reward people who can responsibly handle the mix of credit that most households maintain, which includes one or two unsecured credit cards, a car loan, and a secured credit account, such as a furniture or jewelry store card. Car loans, furniture accounts, and jewelry store cards are “secured” accounts because you must promise to give back the merchandise if you fail to make your payments. Once you have the right mix of credit, of the utmost importance, of course, is making timely payments.
Each month, you’ll want to pay your balances down to 10% to 30% of your available creditâbut not pay off the card. Paying off your entire balance triggers the credit card company to pull your credit, and every time that happens, your credit takes a hit.
There is another reason why it’s not a good idea to use more than 30% of your available credit: The amount of credit available on your account strongly influences your credit score. For instance, your credit score will be much higher if you have $3,000 in available credit as compared to only $300.
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Will My Canadian Student Loans Go Away If I Declare Bankruptcy
If you were a student, either part-time or full-time, less than seven years from the date that you declared bankruptcy, you will have to repay your student loan debt, including the interest charges. Check with Canada Student Loans to learn what they consider to be the last official date you were in school.
If your official last day is under seven years ago, you may still be able to get your student loan debts discharged. You can retain a lawyer and make an application to the court.
You must meet the following requirements:
- You have been out of school for a minimum of five years
- You acted in good faith with regard to the liabilities under the loan
- You have and will continue to experience financial difficulty to such an extent that you will be unable to pay the liabilities under the loan
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Should You File For Bankruptcy
If youve found yourself unable to pay your bills because of the coronavirus pandemic, you might be wondering whether the solution to your financial woes is to file for bankruptcy.
Money expert Clark Howard has been helping people in difficult financial situations find solutions for more than 30 years.
In this article, well talk about who should and shouldnt consider filing for bankruptcy, the impact filing could have on your life and some alternatives you should consider before you file.
What Happens At The End Of Bankruptcy
Your bankruptcy will normally end after a year – this is known as ‘discharge’. After discharge you won’t have to repay the debts covered by the bankruptcy. However you will still have to pay some debts like court fines and loans from the Student Loans Company.
If the people dealing with your bankruptcy think youve been dishonest or reckless, they might ask the court to give you a ‘bankruptcy restrictions order’. This means youll have to follow certain rules for up to 15 years. You can find out what happens if you get a bankruptcy restrictions order.
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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
What Happens If My Credit Card Company Finds Out That I Filed For Bankruptcy
Clients are sometimes surprised to find out that even if they pay off one of their credit cards, the can still close the account if they find out about the recent bankruptcy filing. In fact, theyll probably find out about it through the credit bureaus or other reporting agencies. The danger is that even after struggling to get a credit card paid off before filing bankruptcy, the company may still decide that youre a higher credit risk now that you have a history that includes bankruptcy.
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Tips For Filing Bankruptcy On Credit Cards
Here are some important tips for filing bankruptcy on credit cards:
- Dont make any major purchases on your credit cards in the 60-120 days before you file bankruptcy. The court frowns on any filer who runs up significant debt buying large-ticket items shortly before filing, in hopes of having this debt discharged along with all their other debt. If a judge believes you intentionally ran up debt to scam the system, the judge may reinstate this debt and you will still owe it after the bankruptcy is over.
- Be sure to list every single debt you have on your bankruptcy filing including every credit card, with account numbers. If you forget and leave one credit card off the list, you will likely still owe this debt even after filing bankruptcy. Thoroughness is key.
- Destroy all plastic credit cards after your bankruptcy is complete. You dont want to misplace the physical cards, even if the accounts are defunct. To get a fresh start, cut up the cards and dispose of them.
Talk To A Bankruptcy Lawyer
Need professional help? Start here.
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Types Of Personal Bankruptcy
In the case of individuals, as opposed to businesses, there are two common forms of bankruptcy: Chapter 7 and Chapter 13. Here is a brief description of how each type works:
Chapter 7. This type of bankruptcy essentially liquidates your assets in order to pay your creditors. Some assetstypically including part of the equity in your home and automobile, personal items, clothing, tools needed for your employment, pensions, Social Security, and any other public benefitsare exempt, meaning you get to keep them.
But your remaining, non-exempt assets will be sold off by a trustee appointed by the bankruptcy court and the proceeds will then be distributed to your creditors. Non-exempt assets may include property , recreational vehicles, boats, a second car or truck, collectibles or other valuable items, bank accounts, and investment accounts.
At the end of the process, most of your debts will be discharged and you will no longer be under any obligation to repay them. However, certain debts, like student loans, child support, and taxes, cannot be discharged. Chapter 7 is generally chosen by individuals with lower income and few assets. Your eligibility for it is also subject to a means test, as explained bellow.
How Long Does It Take When Filing Bankruptcy On Credit Cards
Generally, Chapter 7 bankruptcy takes less time to file than does Chapter 13. Thats because Chapter 7 is a much simpler process and does not require the creation of a court-approved repayment plan. Typically a Chapter 7 bankruptcy can be completed within a few months, while a Chapter 13 can take 6-12 months. Some of this is determined by the complexity of your financial situation and the nature of your debts.
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Do I Qualify To File A Chapter 7 Case
You must meet income requirements to qualify to file a Chapter 7 bankruptcy case. If your average income is below the median income for your state, you should qualify to file a Chapter 7 case. However, if your income exceeds the state median income, you may want to talk to a bankruptcy attorney.
If your average income falls below the state median income, it means you pass whatâs called the Chapter 7 Means Test. If you âpassâ the Means Test, you are typically eligible for a bankruptcy discharge under Chapter 7. However, if you âfailâ the first section of the Means Test, you may still qualify to file a Chapter 7 case.
The second section of the Chapter 7 Means Test subtracts allowable expenses from your monthly income. The amount of money remaining after you subtract all allowable expenses is your disposable income. Individuals who do not have disposable income or who have very low disposable income may still qualify to file a Chapter 7 bankruptcy case.
So, What Happens if I Donât Pass the Chapter 7 Means Test?
If you do not qualify for debt relief under Chapter 7, there are a couple things to consider. You can try talking to a lawyer to make sure you donât qualify. If not, you might consider filing for Chapter 13.
Keep Paying Credit Cards If Bankruptcy Isn’t Needed
When contemplating bankruptcy, the first thing to consider is whether you can afford to pay off your credit cards. Why? Because if you make enough money to do so, you probably won’t qualify for Chapter 7 bankruptcy. The court requires filers with significant disposable income to pay some or all of your credit card debt through a Chapter 13 repayment plan. Plus, a bankruptcy filing will remain on your credit report for seven to ten years. So it’s best to consider all available options first.
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Avoiding Credit Card Disputes
Under the bankruptcy laws enacted in 2005, bankruptcy petitioners need to be more cautious about their credit card use than ever before. Its not just because bankruptcy courts can dismiss bankruptcy petitions over what they deem to be overtly fraudulent use it is because card lenders can file a dispute to block your bankruptcy petition.
Understandably, credit card lenders want to ensure that they collect on your debts and then some and if they see that you are preparing to file a petition for bankruptcy, they will look for every excuse in the book to block your petition. The 2005 bankruptcy laws have made it easier for lenders to do so because credit card companies sponsored them.
Therefore, if you want to ensure you can file for bankruptcy without experiencing any hiccups in the form of sneaky credit card lenders, heres what you need to know:
1. If you absolutely have to use your card to purchase necessities , try to use just one card for your purchases. If your credit limit wont allow you to do so, then use as few cards as possible to make those purchases. Credit card lenders can dispute your bankruptcy filing if they believe you have been juggling your credit to make multiple purchases. On that note, keep all of your receipts that way, if lenders dispute your charges, you can prove it was for essential items.
These tips and techniques will help you eliminate one more obstacle in the form of your credit lenders and make your bankruptcy filing go much smoother.