How Will Bankruptcy Affect Your Credit Score
A bankruptcy filing will lower your credit score and may stay on your credit report and in public records for some time. Bankruptcy will stay on your credit for 10 years if you filed for Chapter 7 and seven years if it is a Chapter 13 bankruptcy.
However, exactly how much a bankruptcy will affect your credit score will depend largely on your financial situation before filing bankruptcy.
You can take steps to rebuild your credit such as:
- Staying current on your bills
- Getting a new credit card or a secured credit card
- Trying not to borrow more than you can repay
Keep in mind that filing for bankruptcy might do more to help your credit than harm it. Consider what will happen if you continue to hold the debt and miss payments.
Automatic Stay Goes Into Effect
Immediately after filing a Chapter 7 bankruptcy, a taxpayer can expect that an automatic stay on all collections efforts and legal proceedings will go into effect. This is a legal red light for creditors, collections companies, repossession companies, and other courts. It puts a pause on any efforts to collect on unpaid debts or overdue balances. While the bankruptcy automatic stay is in effect, creditors may not:
- File collections lawsuits in state court
- Attempt to evict you
- Garnish your wages or bank accounts
- Repossess your property
Instead, creditors can only collect through the sale and distribution of assets by the Trustee, as part of the Chapter 7 Bankruptcy process.
Discharging Debts In Bankruptcy
A bankruptcy discharge releases a debtor from being personally responsible for certain types of debts. So, after a bankruptcy discharge, the debtor is no longer legally required to pay any debts that are discharged.
The discharge prohibits the creditors of the debtor from collecting on the debts that have been discharged. This means that creditors have to stop all legal action, telephone calls, letters, and other type of contact with the debtor. This prohibition is permanent for the debts that have been discharged by the bankruptcy court.
You cannot discharge all debts in bankruptcy. Some of the most common debts that you cannot get rid of in bankruptcy are debts from child or spousal support, most student loans, most tax debts, wages you owe people who worked for you, damages for personal injury you caused when driving while intoxicated, debts to government agencies for fines or penalties, and more.
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Make Sure Bankruptcy Is The Right Option For You
Bankruptcy can offer you a fresh start if you can’t see any other way out of your debt problems. However, going bankrupt may have a serious impact on your day-to-day life, so it isn’t for everyone. Make sure you’ve done your research, taken advice and are sure it’s the best option for you.
The Final Steps Of Your Journey Towards Lasting Debt Relief
Getting all of your bankruptcy forms prepared and filed with the bankruptcy court is usually the most time-intensive process of a Chapter 7 bankruptcy. But that doesnât mean that your job is done. There are a few things everyone filing Chapter 7 bankruptcy has to do to successfully complete their bankruptcy case and receive a discharge. Letâs take a look at what you can expect will happen in your Chapter 7 bankruptcy.
Pay Filing Fee in Installment Payments
If you can’t pay the entire Chapter 7 bankruptcy filing fee and you don’t qualify for a fee waiver, then you can apply to pay the filing fee in installments. You can ask to make four installment payments. The entire fee is due within 120 days after filing.
If the bankruptcy court approves your application, it will grant an Order Approving Payment of Filing Fee in Installments. Your installment payment due dates will be in that order. You must pay all installments on time or your case is at risk of being dismissed.
Take Bankruptcy Course 2
You will complete a credit counseling course before filing bankruptcy. There’s a second course you must take after filing bankruptcy. It covers personal financial management and can help you take advantage of your fresh start after erasing your debts through bankruptcy.
You have to take this course after your case is filed but make sure itâs be completed within 60 days from the date of the meeting of creditors. A certificate of completion must be filed with the court.
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Choose The Right Bankruptcy Filing For You
We are proud to represent our clients in four primary areas of bankruptcy relief. Called Chapters, each of these forms of bankruptcy has its own advantages and disadvantages. The four Chapters used for filing for bankruptcy, where we help clients find debt relief, include:
- Chapter 7: Straight bankruptcy, where debts are fully forgiven
- Chapter 11: Complex business bankruptcies with debt reorganizations and restructures
- Chapter 12: Debt relief and repayment plans for family farmers and family fishermen
- Chapter 13: Debt relief for income earners that can help stop foreclosures and other looming debt recovery efforts
When you decide to declare bankruptcy, your lawyer will help you choose the right Bankruptcy Chapter for your financial situation. Filing for bankruptcy is a complex, time-consuming procedure. Your lawyer can help you understand and navigate the filing process from your initial petition to final discharge.
What Happens After You File Bankruptcy
By | Submitted On March 26, 2009
After you have made the decision that bankruptcy is your only way out, you must be aware that filing bankruptcy is a very detailed process and one you must be right on about in order to make it to the other side of financial beginnings. There is a strict time limit that must be met in order to get your bankruptcy filed properly to the courts. The very first step you will be advised to follow is to visit a credit counselor privately or within a group to both learn about bankruptcy and learn how it could or may be avoided.
The second step is to file a petition with the bankruptcy courts within the area you live in. You will be offered to pay the legal fees in installment or in some rare, extreme cases these fees will be waived. This is the decision of the court and every bankruptcy case is different and treated this way. Many people have been under the impression that there is a standard and generic way to handle bankruptcy filings, when in fact every bankruptcy case is unique in their different circumstances.
Understanding this process is essential to your financial success. You of course do not have to learn the bankruptcy laws as well as professionals but a general understanding is quite beneficial. Bankruptcy is a serious financial step in anyone’s life and can be recovered from when you take each step properly and complete it fully. Go see a financial professional today and learn what your options are before it is too late.
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How Long After Bankruptcy Can I Get A Credit Card
It isnt uncommon for people to set up a secured card while they are still in the bankruptcy process. Standard unsecured credit cards at best rates may be available within one year of your discharge.
Remember that your credit history and score are not the only factors lenders look at your income and savings can also be key!
Reaffirming Debt After Chapter 7 Bankruptcy
Occasionally, after you file Chapter 7 bankruptcy, your creditor will want you to reaffirm a debt. Reaffirming a debt is entering into a new contract with the creditor.
Its common to enter into reaffirmation agreements when you have financed a car you would like to keep after your bankruptcy petition is resolved.
Since this is a new agreement after your bankruptcy case is complete, any reaffirmed debt is considered post-petition debt.
Your bankruptcy discharge doesnt forgive your obligation to pay under this new agreement. You need to make your payments as agreed, otherwise the creditor can sue you for the money you owe, and they can come and take the property to satisfy the new debt.
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Bankruptcy And A Personal Injury Case
When you submit a bankruptcy filing to the court, everything you own becomes part of your bankruptcy estate. Practically, this means that all of your possessions, intangible assets, and any property youâre entitled to become part of your bankruptcy estate on the date you file for relief. Whether youâve already filed a personal injury case or youâre still thinking about filing an accident case, the value of that legal claim will be considered part of the estate because you technically became entitled to any settlement you may reach when the accident occurred. If you file a personal injury claim, the bankruptcy trustee assigned to your case will evaluate its potential value and determine whether to pursue the claim on behalf of your creditors. The trustee is even empowered to agree to a settlement amount.
What Happens At My Chapter 7 341 Meeting
What happens at my Chapter 7 341 meeting? The 341 Meeting of Creditors is an opportunity for the Trustee to ask questions about your bankruptcy petition. A bankruptcy attorney from our office will attend the meeting with you. There should be no questions you will not have answers to. The Trustee is just going to verify your identity and ask ask some questions about your assets and debts.
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What Happens Before Filing For Bankruptcy
According to Mathew Harris Law P.C., when you file for bankruptcy, any of your assets that are not exempted will be seized and sold so your creditors can recover what you owe. However, once you’re debt-free, you will be discharged. This is just a short version of how bankruptcy works. But before looking at that, let’s first consider the circumstances that might push a borrower to file for bankruptcy.
Typically, people file for bankruptcy for various reasons, such as divorce, loss of income, unforeseen financial emergencies, or divorce. Mismanagement of finances can also lead to out-of-control debt that requires the services of abankruptcy attorney. However, keep in mind that filing for bankruptcy should only be a last resort option since it can harm your credit record and can be costly. Before filing for bankruptcy, it’s essential to consider other options, such as negotiating a payment plan with your creditors. However, if filing for bankruptcy is the only way out, then the next thing to do is consult with a bankruptcy attorney.
Preparing The Affidavit Of Search Verifying Paragraph 4 Of The Creditors Petition
5.1 Where non-compliance with a bankruptcy notice is relied upon as the basis for a creditors petition, the applicant must conduct a search of the records of both the Federal Court of Australia and the Federal Circuit Court of Australia to verify that there is a valid act of bankruptcy to support the petition. A petition cannot be presented before an act of bankruptcy is available.
5.2 Searches can be conducted electronically using Federal Law Search. Federal Law Search is a searchable database of selected information on cases initiated in the Federal Court of Australia and in the general federal law jurisdiction of the Federal Circuit Court of Australia.
5.3 The search is by name of the respondent debtor. There is no fee for the search of either Courts electronic records. The object of the search is to verify the act of bankruptcy referred to in paragraph 4 of the petition and to see if the respondent has filed any application to set aside the bankruptcy notice or any other related application, such as to extend time for compliance with the bankruptcy notice.
5.4 It is noted that if any such application exists, it will appear in the index by reference to the respondent debtors name. It will not have the same number as the bankruptcy notice. The Federal Court of Australia or Federal Circuit Court of Australia file number allocated to any application filed by the debtor will not be the bankruptcy notice number allocated by AFSA when it issued the bankruptcy notice.
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Still Have Questions Speak To A Bankruptcy Attorney
Bankruptcy gives you a fresh start. But you need to have extensive knowledge of the bankruptcy laws and procedures if you are thinking of filing your bankruptcy petition without an attorney. As bankruptcy has a range of long-lasting consequences, it may be best to speak to a bankruptcy lawyer to guide you based on your particular situation.
Asset Cases Property Is Sold
If you do have non-exempt assets, these will be sold to satisfy part of your debt to your creditors. This property may be sold at auction to a third party. In some cases, you can also use your exempt finances to pay the cash value of important property, keeping it in the family after the bankruptcy is final. Then, whatever money is collected is divided among your creditors.
Sometimes, the trustee will have questions about your exemptions that require investigation or additional documentation. For example, the trustee may need to determine the current market value of your primary home to see if it falls within the exemption limits. In these cases, the trustee will report that information to the court and keep your case open until those questions are resolved.
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Get Help That Stays With Your After Filing A Chapter 7 Bankruptcy
If you are considering filing for bankruptcy, you need an attorney you know will be there from beginning to end. At John A. Steinberger & Associates, P.C., we know how the process works. We will stick with you to protect your interests and your assets as much as the Bankruptcy Code allows. We are a full-service bankruptcy law firm in Southeast MI. We serve debtors and families in Southfield, throughout Metro Detroit, and in the surrounding communities. Call us toll-free at 690-2140 or contact us online to schedule a free initial consultation.
An Automatic Stay Will Come Into Effect
An automatic stay is vital protection granted by the U.S. Bankruptcy Code. It bars lenders from taking any collection actions and coming after your property. An automatic stay will:
- Ensure your creditors don’t come after you for car loans, unsecured debts, and other non-exempt property.
- Stop most wage garnishments. Wage garnishment occurs when some amount of your monthly income is taken from your paycheck to pay to your creditor.
Bankruptcy laws provide that any debtor can bring a civil suit against a creditor for willful violation of the automatic stay and can recover damages.
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Which Debts Can You Discharge In Chapter 7 Bankruptcy
Most debts, such as medical bills, credit cards, and payday loans, can be discharged in a Chapter 7 bankruptcy. However, this is not true for all obligations. You can’t discharge some debts like child support, student loans, recent tax debt, and fines or penalties for violations of the law. Chapter 7 also doesn’t discharge post-petition debts. So if you incur a new debt after filing for bankruptcy, you’ll be on the hook for it after you receive your bankruptcy discharge.
Learn more about debts that are discharged in Chapter 7 bankruptcy.
Attending The Meeting Of Creditors
The § 341 Hearing or Meeting of Creditors is typically the only court hearing you have to attend. The Court schedules 3-4 hearings every 30 minutes. Therefore, the hearing does not last all day or all morning/afternoon. If your hearing is set for 9:00 am, and you are the fourth case called, you should be done by 9:30 am. This hearing is a time for the Trustee assigned to your case to ask you questions. Their job is to verify the information you filed in your bankruptcy petition. Their job is also to collect unprotected property, liquidate this property, and use the proceeds for the benefit of your creditors. If any of your creditors want to attend the hearing they are more than welcome. These hearings are public and anyone can attend.
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What Happens After Your Chapter 7 Bankruptcy Petition Is Filed
You are finally ready to file your bankruptcy petition. You have put in all of the hard work. Your attorney has all of the information necessary to put your case together. Your credit counseling course is completed. You have met with your attorney and signed your Chapter 7 bankruptcy petition papers. But what happens next?
You Will Attend A Meeting Of Creditors
The first thing the trustee will do will be to call a meeting of creditors. This is also called the 341 creditors meeting. During this meeting, the trustee will ask you, under oath, about your assets and debts. Creditors can attend this meeting and ask you questions. But usually, it will be just you and the trustee.
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What Happens Once My Bankruptcy Petition Is Filed
Once your petition is filed with the Bankruptcy Court, the Court will then send all of your creditors a Notice of Bankruptcy Case . This Notice among other things will tell your creditors specifically which Chapter you have filed . Your creditors usually receive this Notice within 7 to 10 days from your filing.
What Happens To Secured Debts
A secured debt is a debt a creditor secures with an asset. A mortgage can be a good example here. When you buy real estate and finance that house with a bank loan, you are giving the bank the right to initiate foreclosure proceedings if you fail to comply with the mortgage terms.
In a Chapter 7 case, creditors can foreclose the property even after you file for bankruptcy if you don’t pay your secured debts. You can, however, keep the property if you make an agreement with the lender to continue making monthly payments on your loans.
In Chapter 13 cases, you can retain your property if you continue to make payments through the Chapter 13 payment plan.
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