Once The Relief Program Ends You May Need To Take Additional Actions
Forbearance and deferment programs will only last so long, and then you’ll need to pay your bills. And some lenders may even require you to pay all your missed payments at once. If you’re still struggling at that point, it may be time to ask your lender for some longer-term relief such as lowering the interest rates or monthly payment amount on your mortgage, auto loans or credit cards.
Underwater on your mortgage? You can apply for a loan modification that will rework the terms of your mortgage. Typically, if approved, you can reduce your monthly payment to a more affordable amount. This step requires you to file paperwork with your loan servicer.
While you can self-submit the application, Tadross says it may be better to work with an expert who specializes in this. If you do hire an attorney, expect to pay a flat rate of about $2,500 to have the paperwork compiled and processed. You can also reach out to a HUD-approved housing counselor, who will work with you for free to compile the necessary paperwork for the application.
When it comes to credit card debt, Tadross says the best thing to do is negotiate a debt management plan or a settlement, where you work with a non-profit debt counselor to consolidate all your outstanding debt into a single monthly payment that you pay off over the course of three years. Usually your counselor will negotiate a lower interest rate for you while you’re working to pay off your balances.
Drowning In Debt After Loss Of Income
When you lose income due to unemployment or other reasons, it is possible to face a cascade of financial problems. You stay out of a job for an extended duration, and the debts pile up unimaginably, even unemployment compensation may not appear to help.
Before you know it, you are looking at bigger issues like eviction, foreclosures, harassment calls from creditors, and possibly lawsuits. In such times of financial distress, Tristan Brown and the legal team from the TL Brown Law Firm say that bankruptcy can provide you with the much-needed relief. With legal expertise in your corner, you can take a breath from creditor harassment and collection calls as you prepare to file for bankruptcy. You also dont have to lose your essential property to your creditors.
Are You Being Sued Or Harassed
If you stop making payments on your credit cards, you’ll typically begin receiving numerous calls from the credit card company or its agents. The more delinquent you are, the more frequent and harassing the calls will become. For most people, the constant harassment from debt collectors leads them to consider bankruptcy relief.
Depending on your assets and the amount of debt you owe, the credit card company could decide to bring a lawsuit to collect its debt. If the credit card company obtains a money judgment against you, it will be able to garnish your wages or go after your assets to satisfy the debt. If you’re facing a lawsuit or the credit card company isn’t willing to work with you, it might be time to consider your bankruptcy options.
Learn about stopping a credit card lawsuit with bankruptcy.
Will Bankruptcy Stop Wage Garnishment
Yes. Once you declare bankruptcy your wages are protected from garnishment.
A wage garnishment is a court order that redirects a portion of your earned wages to a creditor. If your wages are being garnished, part of your pay-cheque is taken to pay back a specific debt. Anyone you owe money to can submit their claim to the court. If a judgement is granted in their favour, they have the option to contact your employer to garnish your wages .
As soon as you sign the bankruptcy documents there is an immediate stay of proceedings. This puts an immediate stop to any current garnishment and provides legal protection against future garnishment.
When Facing A Divorced
Divorce is the last thing most of us want to imagine. Forget the emotional toll it can have on you, a divorce can bring you to your knees financially. Ironically, money problems are a huge contributing factor to divorce in the first place, but partners still fight over money upon separation, especially if they took debts together. Both partners have to pay legal fees for representation in court, which only adds to the financial burden. When dealing with such a scenario and you find it burdensome, filing for bankruptcy could be a good idea.
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What Documents Do You Need To File For Bankruptcy
Theres a heck of a lot of paperwork and forms and documents involved in bankruptcy, but lets talk about what you need to gather up at the start:
- Tax returns for the past two years or four years
- Income documents
- Mortgage information
- Vehicle information
- Retirement information
- Other documentation showing any other debts or expenses, like alimony or child support
Yes, thats a lot. Bankruptcy is not an easy out! Also, your particular state or court system may require more. Get ready to do a lot of hunting and have a lot of patience here.
When Is Bankruptcy A Good Idea
Many people believe that bankruptcy is and will always be nothing but a bad thing. In the public mind, bankruptcy means losing your house, your livelihood everything you own. This is, for obvious reasons, an undesirable mental image. However, bankruptcy may be a wise and important choice to make, depending on your personal debt situation.
So, how do you know if filing for bankruptcy is the right decision for you? Understanding how bankruptcy works and what it is for can help.
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Is Bankruptcy My Best Option6 Times When Declaring Bankruptcy In Canada May Not Be Right For You
When youre in financial difficulty, may sound like the only way out, but there are times when filing bankruptcy in Canada isnt your best course of action. There are quite a few things to take into account before forging ahead with such a big decision, and if you dont consider your options or think about how bankruptcy could affect other areas of your life, you could find yourself in a bigger predicament than where you started off.
Essentially, bankruptcy is a legal process that provides debt relief to consumers who are unable to repay what they owe to their creditors. Its intended to help honest people who find themselves in unfortunate circumstances.
Regardless of your situation, the bankruptcy process has long-term implications that can affect your credit and your personal life, and its something that should always be turned to as a last resort.
If youve been asking yourself is bankruptcy my best option? set aside some time to take a good look at your financial situation, and if any of these points apply, filing bankruptcy may not be right for you.
What Happens If You File For Chapter 7 Bankruptcy
If youve lost your drivers license due to unpaid traffic fines, Chapter 7 bankruptcy may help reduce your debt so you can pay the fines and get your license back. Get out of debt and solve your money troubles with this complete guide to repairing your credit and regaining financial freedom. The New Bankruptcy: Will It Work for You?
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You Started A Higher Paying Job
Qualifying for Chapter 7 bankruptcy means passing the means test. Your income is essentialthe means test looks at your average earnings over the six months before you file. The higher your income, the less likely you’ll pass the means test. If you recently started a higher-paying job, your means test average income increases every month that you wait to file. Filing for bankruptcy sooner rather than later may help you pass the means test. However, keep in mind that’s not all that the trustee and court will consider. If your actual income is higher than what you need to cover monthly expenses, the trustee will recommend converting your case to Chapter 13.
If You Need Bankruptcy Protection Make It Count
There’s a limit on how often you can apply for bankruptcy, which is why Tadross recommends his clients think very carefully about it before going that route. The danger of jumping into a bankruptcy head-first right now is that you may end up incurring more debt over the next few months. If that happens, and you’ve already filed, then you won’t have a lot of options to wipe out your new debt.
If you file a Chapter 7 bankruptcy and receive a discharge of your debt, you can’t file again for eight years. If you file for Chapter 13, you’ll need to wait six years before you can file for a Chapter 7 bankruptcy. If you want to re-file for Chapter 13 bankruptcy again, the waiting period is two years.
It’s important to consider the timing. Will you see any benefit now? For example, if you’re about to lose your home or your car is going to be repossessed, then filing for a Chapter 13 and stopping the immediate foreclosure may help. Several states and cities have halted foreclosures and those with federally-backed mortgages are protected for now, but many homeowners who aren’t covered by these measures.
If you just lost your job or were furloughed because of the coronavirus, but expect to be rehired once business resumes, then it may be best to wait, says John Rao, an attorney and bankruptcy expert with the National Consumer Law Center.
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Your Lender Wants To Repossess Your Car
Bankruptcy’s automatic stay also puts an immediate stop to any efforts by your lender to repossess your car. In Chapter 13, you can catch up by including back payments in your plan. In both chapters, you might be able to get your car back if the lender repossessed it recently. Talk to a local bankruptcy lawyer. If you’d like to learn more, read Can the Lender Repossess My Car During Chapter 7 Bankruptcy and Car Repossession and Bankruptcy.
Facilitates Freedom From Certain Debts
Many kinds of debts are wiped out by Chapter 7 bankruptcy. Medical bills, personal loans, past-due rent, and business rents are some of the debts that are cleared. However, recent tax debt and child support cannot be covered by chapter seven bankruptcy. In most cases, student loans also cannot be cleared. However, this can still provide an immense amount of relief for those who are drowning in debt.
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Day One Credit: The Keys To Your Fresh Start
Its also surprisingly common for people who file for bankruptcy to suddenly find themselves need to replace their car, which can be an added sources of stress they dont need at a difficult time. Many people just assume that having an open or recently discharged bankruptcy means there is no way they can get financing to make a vehicle purchase. Not true! There are lenders out there who have car loan programs specifically designed to serve bankruptcy customers. Day One Credit has a assembled a whole network of those lenders so we can help you by finding a bankruptcy car loan to fit your situation. Explore how it works on our Why Day One page, get answers to your questions on our Common Questions page, or feel free to call us directly at 855-475-4725 and well be happy to help!
At Day One Credit we are experts at finding the best possible bankruptcy car loans in order to help our customers purchase high-quality used cars. We are not lawyers, we do not give legal advice, and nothing we say should be taken as legal advice. Your first step in anything related to bankruptcy should always be seeking the advice and counsel of a qualified bankruptcy attorney.
Youve Met With A Bankruptcy Attorney To Discuss Your Options
Filing for bankruptcy often carries a negative stigma. The negative impact on credit and credit reports makes bankruptcy a hard pill to swallow. Do you meet the bankruptcy requirements and accept all of the conditions that come with filing? Perhaps bankruptcy is the best option for you. However, prior to filing, you want to be completely sure that youve exhausted all available options. Be certain there are no other measures you can take to alleviate the debt you have acquired. It is also a good rule of thumb to consult with an experienced bankruptcy lawyer. Take your time and pick the lawyers brain to learn what options you have at your disposal. He or she might have other options outside of bankruptcy.
After you and the bankruptcy attorney discuss your options, you can feel comfortable knowing you thoroughly researched prior to making your decision. Additionally, should you decide to file, you now have a helpful bankruptcy lawyer at your disposal.
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Will My Credit Card Debts Be Wiped Out
You should figure out if your credit card debt will be wiped out by a bankruptcy proceeding before you file. If you lied on a credit card application or spent well beyond your means, bankruptcy may not be able to forgive your credit card debt.
Chapter 7 is the best way to get credit card debt discharged. Chapter 13 bankruptcy will require you to repay most of the debt.
How Do Bankruptcies Affect A Joint Mortgage
If one person files for bankruptcy, that can have an impact if you both are on the mortgage. There are instances where one persons bankruptcy can cause issues with keeping the home, even if more than one of you is on the mortgage. In order to be fully apprised of what can happen, talk to your attorney.
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Recover From Chapter 7 Bankruptcy With Help From Day One Credit
Recovering after bankruptcy can feel like a daunting task, but with a little patience and smart decisions, you can do it. If youve recently had your Chapter 7 bankruptcy discharged and need to buy a used car, you might be nervous about whether or not any lender will work with you when they see that big red flag of a bankruptcy on your credit report. Many lenders may reject you because of your bankruptcy, but not all lenders! Day One has established strong working relationships with a network of reputable lenders who are willing to consider lending to those with a recently discharged bankruptcy. If you meet our guidelines and are approved, then youve got a great way to start rebuilding your credit by making on-time monthly payments on the bankruptcy car loan we find for you, not to mention the car you need! Got questions about how this works? Check out our Common Questions page, or contact us and well be happy to talk you through your options!
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 Continue readingRecovery Steps After Chapter 7 Bankruptcy
When Is Bankruptcy Discharged
To have your bankruptcy discharged means you are released from being personally liable for the debts owed to your creditors included in your bankruptcy.
It signals the start of your fresh start. Your discharge date will depend on your type of bankruptcy:
- Voluntary bankruptcy through a Debtors Petition usually ends, or is discharged, three years and one day after the acceptance of your Statement of Affairs.
- In involuntary bankruptcy, called a Creditors Petition, the trustee appointed will send you the Statement of Affairs to complete and return. In this case, the trustee will lodge the Statement of Affairs. The bankruptcy discharge date is three years and one day after the Statement of Affairs has been lodged and accepted. Its therefore in your best interest to get this completed as soon as possible to get the bankruptcy period started.
Your discharge from bankruptcy will usually occur automatically if you have met your obligations under the Bankruptcy Act unless your trustee has lodged an objection.
Once your bankruptcy has been discharged, youll be released from most of the provisions of the Bankruptcy Act. However, you may still need to assist the trustee.
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Bankruptcy Is Not The End Of Your Financial Life
If you can no longer afford to pay your bills and you haven’t been able to negotiate better terms with your lender, then it may be time to consider bankruptcy. Don’t beat yourself up over it too much, Rao says.
Filing for bankruptcy is often seen as this admission that “I’m a failure,” but that’s not usually the case, he says. And while it’s a step most people don’t want to take, bankruptcy can provide a lot of relief if done right.
“It really does provide that fresh start,” Tadross says, adding that once your Chapter 7 bankruptcy is approved, or you receive a discharge in your Chapter 13 case, you’re completely debt-free.
Chapter 13 bankruptcies can stay on your credit report for three years, while Chapter 7 cases disappear after 10 years. But that won’t prevent you from getting approved for credit.
Quite the opposite, Tadross says, adding he usually advises clients that they will likely receive dozen pre-approved credit card offers within a week of completing their bankruptcy. Why? Because creditors know you’re debt-free and that you’re not going to be able to file for another bankruptcy for several years.
Debt can feel like an albatross around your neck, Tadross says, but you shouldn’t feel humiliated that you’re taking steps to rectify it through bankruptcy. “You’re just making arrangements to catch up on what you owe it’s not the end of the world,” he adds.