When Filing For Bankruptcy Is A Good Idea
There are situations in which filing for bankruptcy is a good idea. If you have lots of unpaid debts with large banks, like Capital One, Chase, etc. These big banks can and will sue you over large unpaid debts because they have the resources, and they suffered the full loss. If you have many accounts owned by big banks, bankruptcy may be a great option. Or, if youre facing foreclosure, liens, etc., bankruptcy could help you.
Filing For Bankruptcy Does Cost Money
Despite the fact that most people file for bankruptcy because they can’t make good on their debt payments, for many, the process isn’t free. Most consumers will need to pay filing fees and many hire an attorney to help them through filing process .
Chapter 7 and Chapter 13 cases typically cost between $300 and $350 for filing fees, according to the National Bankruptcy Forum. You may be able to pay the filing fees in installments; most courts will allow it if you can show it would be a financial hardship to pay all at once.
If you hire an attorney, that’s an additional expense. For a Chapter 7, you can expect to spend between $1,500 and $2,000 in legal fees, depending on the complexity of your case, Tadross says. These fees need to be paid before the Chapter 7 is filed in court to avoid any issues with your attorney becoming another creditor.;
For Chapter 13, it’s a bit more expensive, generally around $2,500 to $3,500 for the case. That’s because many Chapter 13 bankruptcies can take up to five years to resolve, and the attorney will need to continue to manage your case. But, in these cases, you usually can pay the attorneys’ fees over time.;
When You File Will Affect How Many Tax Refunds You Lose
When you declare bankruptcy in the calendar year can mean the difference between losing only one years tax refund or losing multiple refunds. Your tax refunds for any years taxes that need filing, plus the refund from the year you file go to your bankruptcy estate.
If you normally get a tax refund, January or February might be a bad time to file bankruptcy.
Early in a calendar you likely would not yet have filed taxes for the previous year as you dont normally get t-slips until the end of February, so therefore if you file bankruptcy in that period, the refund would go to the bankruptcy estate along with the refund next spring. This is why many people wait until after their tax returns have been filed and they have received their refund to declare bankruptcy.
Does the time of year matter when youre considering filing a consumer proposal?
One key difference between a bankruptcy and consumer proposal is that you keep your assets, and that includes any tax refund owing to you. So you dont lose any tax refunds in a proposal.
There is however still a timing issue to consider when filing a proposal if you owe money, or will owe money, to Canada Revenue Agency. Your proposal will include all tax debt up until the year of filing but not any owing for the year you file your proposal.
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Is Bankruptcy Right For You
Before you start looking for Licensed Insolvency Trustees in Ontario, its a good idea to make sure that bankruptcy is your best option. Bankruptcy will have a significant negative impact on your credit. It will also become a public record.
If you can avoid bankruptcy, then its in your best interest to do so. Every debt solution has its benefits and drawbacks, so the right option depends on your financial situation.
Make sure to consider all the below alternatives to bankruptcy before you contact a trustee:
It can be helpful to talk to a trained professional who can assess your situation and offer an unbiased opinion on your best option to start your debt-free journey. Debt.ca can connect you with a trained debt relief specialist for a free initial consultation. Whether you need a credit counselling session or more information on bankruptcy, they can help you evaluate your debts, credit report and score, and budget to determine the optimal solution for your unique financial situation. A fresh start is a phone call away.
Getting Your Bankruptcy Discharge Is Virtually Guaranteed
If youâve never filed bankruptcy before, pass the means test, and are honest in your dealings with the bankruptcy court and the bankruptcy trustee, you can get your bankruptcy discharge in as little as 3 months. As long as you make sure you meet all requirements before and after filing your bankruptcy case, itâs basically automatic.
What Happens After Filing For Bankruptcy In 2021
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In a Nutshell
Knowing what happens after you file bankruptcy can make it seem less intimidating. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Collection Accounts Can Be Removed From Your Credit Report
Im sure youve heard of credit repair; everyone has. But what is credit repair? Its not what you may think; no attorneys are treating to sue collection agencies or using some genius loophole in the system. All credit repair is, is disputing;negative accounts on your credit report with the Credit Bureaus.
The Credit Bureau has 30 days to contact the creditor and verify the accuracy of the account. If they cannot validate the item, it must be removed from your credit report entirely. Paying off collections doesnt help your credit score at all. But, having a collection removed from your report will have a positive impact on your score.
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Youre Putting Everyday Necessities Onto Credit Cards
Consistently putting groceries or gas on a credit card because you have no available cash is a big red flag that youre on a treadmill of debt. Most people do this because they spend their entire paycheck on debt payments.
This cycle makes your situation worse. You spend $100 on your minimum payment, but you need $100 in groceries, so you charge it to the card you just paid. Your total debt actually goes up from this money trade because of interest.
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Why Bankruptcy Often Helps Credit
Bankruptcy is often good for your credit.
Because before a person files for bankruptcy, their credit report is a mess.
The accounts are all listed as:
Lots of people even have judgments on their credit reports.
- When you file bankruptcy, then all of the accounts on your credit report get marked as included in bankruptcy.
Thats right, they are not late or in collections any more.
The balance on these accounts also goes to $0 and the judgments get voided.
You Just Want To Stop Collection Agents From Calling You
There a simpler way to do this. Its called the Fair Debt Collection Practices Act . The FDCPA requires that collectors stop calling you if you ask them to. Theyre also not permitted to call people who know you or contact you at work if you ask them to stop.
Simply send the company a certified letter requesting this. After that, no agency employee is permitted to contact you except to let you know theyre going to sue you or are stopping collection efforts. Suing collectors who violate the FDCPA is a popular and lucrative practice.
Recording your calls and saving your voicemails is an effective way to prove collectors are continuing to call you even after you asked them to stop. The FDCPA does not apply to your original lender, however, since they have a business relationship with you and are permitted contact. Usually, the original lender is not nearly as annoying as a collections agency, though.
What To Do Before Filing Bankruptcy
Do contact an Ohio bankruptcy lawyer as soon as you think youre in trouble. Meeting with an attorney to discuss your financial situation will help provide the necessary knowledge and advice that you need to move forward and consultation is FREE. Too many people wait until the last minute, which can dramatically limit the number of options that are available to you.
Do be honest. Be forthcoming with your Ohio bankruptcy lawyer, as well as yourself about everything. It is imperative that you disclose everything and anything about your financial situation in order for it to be handled properly. Whatever information you tell your attorney, will stay with your attorney. If there is information that must be disclosed in bankruptcy papers, then your attorney will discuss this matter with you beforehand. The attorney-client confidentiality protects you from having unwanted information released. For example, if you have a house that is paid off or a big bonus from work that you do not want to discuss, your attorney will advise you as to whether this is information that you will need to disclose. It is far worse to hold information back and realize later on that you are under penalty or perjury for not sharing information.
Do continue to make payments on any vehicle that you want to keep. If you default on a payment, creditors have the right to repossess your vehicle without giving you notice.
What Are The Benefits Of Filing Chapter 7
Most people find that filing for debt relief under Chapter 7 is a good thing. Some of the reasons that filing Chapter 7 is a good thing include:
Chapter 7 gets rid of debts quicker.
When you file bankruptcy under Chapter 7, you can get rid of your unsecured debts in as little as four to six months after filing. Chapter 7 is the quickest bankruptcy case.
An unsecured debt is money owed to a person or a company that is not secured by property. In other words, if you do not pay an unsecured creditor, that creditor cannot take your property without a court order. The creditor has to file a lawsuit and get a court order before it can try to take any of your property or money to pay the debt.
Examples of unsecured debts that you can discharge in a Chapter 7 case include credit cards, medical bills, personal loans, old utility bills, some old income tax debts, payday loans, and old rent or lease payments.
Some debts are not dischargeable in bankruptcy. Not dischargeable means that you cannot get rid of these debts when you file a bankruptcy case. Alimony and child support are two examples of debts that you cannot get rid of in bankruptcy. Student loans and most income tax debts are also not dischargeable in bankruptcy.
This is not a repayment plan like Chapter 13.
You get to keep your future income and property.
Chapter 7 stops creditor harassment and lawsuits.
You can qualify for loans and credit after Chapter 7.
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File Chapter 7 Bankruptcy For Free With Upsolve
If you have minimal assets and simply need a fresh start, Upsolveâs free web app gives you the tools you need to successfully navigate the Chapter 7 bankruptcy process without a lawyer. If your financial situation is a bit more complex, and Upsolve is not a good fit for you, it can help you find a bankruptcy attorney in your area.
Ready for the next step? If so, take this short quiz to find out if Upsolve is a good fit for you. Not quite sure how it works? Check out this 10-Step Guide on how to file bankruptcy for free. And feel free to browse our Learning Center to find answers to all of your questions!
The Things That Happen Immediately After Filing Bankruptcy
As soon as you file your Chapter 7 bankruptcy, you are given a case number and a bankruptcy trustee is assigned to your case. The bankruptcy trustee will oversee your bankruptcy filing, will review your bankruptcy forms, and may ask for additional documents to verify your information. The trustee will also conduct the meeting of creditors.
Protection from your creditors begins immediately after filing for Chapter 7 or Chapter 13 bankruptcy. This is called the automatic stay. Once you file and the automatic stay takes effect, your creditors are not allowed to take collection action against you.
After you file for bankruptcy protection, your creditors can’t call you, or try to collect payment from you for medical bills, credit card debts, personal loans, unsecured debts, or other types of debt. Wage garnishments must also stop immediately after filing for personal bankruptcy.
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Bankruptcy In Florida: The Comprehensive Guide
If you are struggling to keep up with your debt, bankruptcy may be the solution. Bankruptcy allows borrowers to stop all collection efforts and get a fresh start immediately. Phone calls, wage garnishments, foreclosure sales, and collections notices all must stop immediately after a bankruptcy is filed. Bankruptcy also provides for a discharge of debt to give people the fresh start they need to rebuild. Bankruptcy has a lot of benefits, but it is not right for every situation. If you are considering bankruptcy, contact a bankruptcy lawyer in Tampa to schedule a consultation.
Which One You Should File First Depends On Your Situation
Although you shouldnt file for divorce and bankruptcy at the same time, you can still choose which process to take care of first. While it is ultimately up to you, there are a few things to consider before determining which to file first. If you and your spouse are on amicable terms, it may be best to first file bankruptcy. Filing bankruptcy first allows you both to share the cost of attorney and filing fees and could possibly protect you from paying joint debt which could be beneficial if you and your spouse own property together.
Some jurisdictions also allow double exemptions on assets if you file joint bankruptcy; for instance, if your home is exempt up to $50,000 with a single bankruptcy, some jurisdictions could allow a double exemption, allowing the home to be exempt up to $100,000. Since exemption laws vary from district to district, its always beneficial to consult a bankruptcy attorney in your area to see what options are available for you. Filing for bankruptcy first also simplifies the division of assets in divorce because they are typically divided during the bankruptcy process although they can sometimes change.
If you and your spouse choose to file for chapter 7 bankruptcy, your joint income might put you over the income threshold for filing. If your individual incomes are below the threshold, you may want to explore the options of filing for divorce before bankruptcy.
3. Chapter 7 is ideal for a quick divorce
4. Not all debts are included in bankruptcy
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Talk To A Bankruptcy Lawyer
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The #1 Reason People File Bankruptcy: Unpaid Medical Bills
According to Snopes.com, the number one reason people file for bankruptcy is because of medical bills. Approximately 643,000 Americans filed bankruptcy because of medical debt each year.
If you have tens of thousands of dollars in unpaid medical debt that you could never pay off, it makes sense to file bankruptcy. Most people would say yes, but there is another option that is way better and cheaper!
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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.;