Disadvantages To Debt Settlement:
- There is no guarantee creditors will negotiate with you.
- Stopping payments to convince creditors you are serious about not paying could result in your accounts going into collection and/or legal actions aimed at garnishing your wages, further damaging your credit as your debt increases.
- When you stop payments so you can save for a lump-sum offer, late-fee penalties and accrued interest will increase the size of your debt.
- If you settle a debt, state and federal tax collection will treat the forgiven amount as income and require you to pay taxes on it.
- Debt settlement companies often charge expensive fees, and not all creditors are willing to work with the one you select.
- Debt settlement will damage your credit score and your ability to obtain credit in the future.
When The Trustee Pays Credit Card Creditors From The Bankruptcy Estate
Most Chapter 7 bankruptcies are “no-asset cases.” There’s no property to sell for the benefit of the creditors. In the rare asset case, creditors will receive money according to a priority ranking system. Credit card debts–which are nonpriority claims–fall at the bottom of the list. So it’s unusual for a credit card company to receive any payment at all.
How Luftman Heck & Associates Can Help
Prior to trying to get any type of new credit during bankruptcy, you should speak to a Cleveland bankruptcy lawyer at Luftman, Heck & Associates. Sometimes it makes more sense to wait until your bankruptcy proceeding is over before taking out loans. Once its over, you may be better off taking small loans that you can easily repay and use to rebuild your credit.
LHA can evaluate your particular situation and give you advice on whether or not obtaining credit during your Chapter 7 or Chapter 13 bankruptcy is a smart move. Contact us today by calling or emailing .
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Can You Declare Bankruptcy On Credit Cards Only
While credit card debt is a major reason people wind up filing for bankruptcy, you cannot file for bankruptcy on credit card debt alone, as the law requires that all your debts be listed in the bankruptcy documents. However, because bankruptcy can eliminate credit card and other unsecured debts, filing will often put you in a better financial position that allows you to keep your home.
Keeping a house is a major concern for most people filing for bankruptcy in Ohio, and there are several ways that bankruptcy can allow you to keep your house while discharging unsecured debt such as from credit cards. You will be able to keep your home if you can meet the requirements of the bankruptcy chapter that you choose, whether Chapter 7 or Chapter 13.
Bankruptcy laws are complicated, and our Ohio bankruptcy lawyer can help you choose the correct chapter and increase the chances of your being able to keep your home, car, and other assets. The skilled and compassionate Ohio debt relief attorneys at Fesenmyer Cousino Weinzimmer understand that even the most well-intentioned people can find themselves in financial difficulty.
Company Credit Cards And Bankruptcy
One of the most common reasons people want to withhold a credit card from their bankruptcy is because its a business card. If your employer has issued you a credit card in your name to pay for work-related expenses, filing for bankruptcy can affect that card. Youll need to list it in the bankruptcy if you have any liability to the lender under the terms of the card.
How do you know if youre liable? You can usually tell by examining where the monthly credit card statements are delivered.
If the monthly statement for your company card goes directly to your employer, thats whos responsible. If the statement comes to you and you pay it and then submit a request for reimbursement, youre the liable party.
If you have any personal liability for a credit card, even if its used for business expenses and your employer reimburses you, the card must be listed on your bankruptcy petition. And chances are if youre liable for your company card it will be closed as soon as you file for bankruptcy.
Its important to speak to your employer if youre using a company card thats included when you file for bankruptcy because the last thing you want is for your employer to be notified by the credit card company that the account was closed.
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Advantages To Chapter 13 Bankruptcy:
- Protects your property, including your house and car, from foreclosure and repossession to cover debts
- After you complete required payments, you receive a discharge of debt
- You arent required to pay taxes on forgiven debt
- Waiting period before you can file again is two years six years less than under Chapter 7
Youll Only Be Eligible For Certain Cards
Filing for bankruptcy, regardless of which type and the circumstances, will have a lasting impact on your credit score. And, a bankruptcy will show on your credit report for a significant amount of time. A Chapter 7 bankruptcy will stay on your credit report for 10 years and a Chapter 13 will stay on your report for up to seven years.
With a less-than-stellar credit score, responsible use of a credit card can help rebuild your score. But it may seem like a Catch-22 since you wont qualify for many cards like those offering rich rewards or premium perks.
The best move is to apply for a card designed for someone looking to build their credit. A secured card is an ideal card for this purpose and even with a fresh bankruptcy you may be able to get approved. With a secured card, the credit limit you receive is typically equal to the amount of the security deposit you put down.
There are also a handful of unsecured cards that wont check your credit score or are willing to extend a line of credit even to someone with a blemished credit history. These cards typically come laden with fees and sky-high rates. Secured cards tend to have lower costs.
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Can I File For Bankruptcy With $35k In Credit Card Debt
Filing bankruptcy should be looked at as a last-resort scenario, but, in some cases, it can be helpful or even necessary to get back on your feet financially.
There’s no minimum amount of debt you have to have before you can file bankruptcy, and the maximum amount of unsecured debt is in the hundreds of thousands of dollars. So it’s possible to file bankruptcy with $35,000 in credit card debt.
Whether that’s a good idea, though, is another question entirely. Credit card debt is considered dischargeable, but the negative impact a bankruptcy is likely to have on your credit can be severe and last for years. As such, it’s crucial that you research the process and learn more about alternatives before you hire a bankruptcy attorney.
Can I Keep Some Credit Cards If I Declare Bankruptcy
Bankruptcy has helped individuals rebuild their finances and secure their futures. However, bankruptcy may require debtors to make some sacrifices along the way. One of the most common questions that debtors have about their life after bankruptcy is if they can keep their credit cards. Our Indianapolis bankruptcy attorneys explain if you can below.
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Chapter 7 Bankruptcy: One Way To Get Rid Of Credit Card Debt
| Filing for Chapter 7 can eliminate credit card debt. |
In order to make important purchases such as a car or a house, you need to build up your credit to get your rating high enough to be approved for home or car loans. Increasing credit card debt threatens your credit rating. When your credit card debt becomes unmanageable and you cannot pay what you owe, you may want to consider a Chapter 7 bankruptcy.
One of the most common reasons people file for bankruptcy is because of out-of-control credit card debt. The Chamber of Commerce found Wisconsin residents owe an average of $6,700 in credit card debt each month. High interest rates can raise the debt and make it harder to pay back. Fortunately, most or all of your nonpriority unsecured debt, including credit card debt, may be eliminated when you file for Chapter 7 bankruptcy.
During hard financial times you may consider filing for bankruptcy to relieve your credit card debt. Oak Creek bankruptcy attorney Steven R. McDonald will guide you through the process to help you get a fresh start.
Popular credit cards used in Wisconsin include:
- American Express
- Visa
- Wells Fargo
Schedule a FREE consultation with attorney Steven R. McDonald to see if your credit cards are eligible for bankruptcy debt relief.
Read more about what you absolutely have to know before filing for bankruptcy in Milwaukee or other locations in Wisconsin.
Can I Be Sued After Bankruptcy
No. One of the benefits of filing for bankruptcy is that it prevents creditors from taking you to court. It also prevents creditors from engaging in further collection attempts. After filing bankruptcy, the automatic stay prevents credit card companies from calling you, sending letters and engaging in similar activities.
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Five Ways To Get Out Of Credit Card Debt
In the throes of this recession, the average Americans is just piling on more credit card debt and finding it more difficult to find a way out. According to a report released by TransUnion, as of October 2009, the national average for credit card debt $5,612 per person. The average! Thats scary knowing that the job situation is only getting worse with at least one company announcing job losses at least every week.
You Cant Plan To Erase New Debt
Credit card debts are unsecured debts and generally dischargeable in a bankruptcy case. But that doesnât mean you can max out your cards as youâre getting ready to file your case. Debts incurred with the intent to discharge them in bankruptcy are not erased.
Debts incurred for luxury goods or services purchased in the 90 days before filing are presumed non-dischargeable. A creditor can file an adversary proceeding objecting to the discharge of these debts.
In that case, the creditor only has to show that you charged more than $725 to pay for luxury goods or services in the 90 days before you filed your case. They donât have to prove that you didnât intend to pay it back. They donât even have to prove that you were planning to file bankruptcy at the time. Instead, youâre the one that has to prove to the court that the items or services you purchased were necessary items.
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What Else Should I Know
Utility Services Public utilities like the electric company cannot refuse service or stop it because you filed for bankruptcy. You may be required to make a deposit in order to continue service. However, you will still have to pay any bills that are due after bankruptcy filings are closed.
Discrimination A bankruptcy filing does not allow an employer, government agency, student loan lender, or other entity to discriminate against you.
Drivers License: If your license was lost solely due to the inability to pay damages caused by an accident, bankruptcy can help you get it back.
Co-signers When someone cosigns a loan with your, and you file bankruptcy, the cosigner might have to repay the loan. You may be able, depending on the terms of your Chapter 13 plan, to protect the cosigner if you file Chapter 13.
How To File Bankruptcy
It is important to contact an Ohio bankruptcy attorney as soon as possible if you believe you are in financial trouble. Consultation is free. Many people delay, which can limit your options.
Be honest. Talk to your Ohio bankruptcy lawyer and yourself about everything. To ensure that the process is done properly, it is essential that you tell everyone and everything about your financial situation. Any information that you give your attorney will be kept confidential. Your attorney will talk with you before disclosing any information required to be included in bankruptcy papers. You are protected from any unwelcome information by the attorney-client confidentiality. Your attorney can advise you whether you need to share information such as a mortgage payment or a bonus. It is worse to keep information secret and later discover that you are subject to perjury or penalty for not disclosing it.
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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.
Should I Keep Paying On My Credit Cards After Filing For Bankruptcy
If you successfully file bankruptcy, you will no longer be expected to make credit card payments. Instead, you will have to follow the Chapter 13 repayment plan or liquidate your applicable assets under Chapter 7. Continuing to make payments on credit card debt that will be discharged at the end of your bankruptcy wont really make sense.
However, if you are thinking about filing bankruptcy for credit card debt, you need to continue to make the payments that you can until you have decided for sure and found out that you qualify to file. To file Chapter 7 bankruptcy, you have to pass the means test. And if your debt is too high or youre not current on your taxes, you may be unable to file Chapter 13. In either case, if you skipped credit card payments but then found out you dont qualify for bankruptcy, you might have made your situation much worse.
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Is That Credit Card Right For The Post
Rebuilding your credit rating is an important first step after a bankruptcy discharge. One of the ways post-bankruptcy debtors rebuild their credit is by taking out a credit card but how do you know if the credit card is worth it or just another trap door leading to more debt? Below are few tips on how to choose the right credit card while rebuilding your credit after bankruptcy
Is the credit card issued by a major bank? You want a credit card that you can use just about anywhere and that will report your payments to one or more of the credit bureaus.
Does the credit card have a teaser rate or is the initial interest rate there to stay? One of the most common ploys of high interest rate credit cards is to get the debtor with a low teaser interest rate that skyrockets within a few months. Before you agree to taking on a credit card, read the fine print and find out what the true interest rate is.
Does the credit card have a grace period that allows you time to pay the balance without accruing interest? For post-bankruptcy debtors, having a grace period can help them avoid the slow slide into debt that landed them in bankruptcy in the first place. Smart post-bankruptcy debtors make sure that their credit card has a grace period with fair terms.
Don’t Stop Paying Credit Cards Before Qualifying For Bankruptcy
In most cases, if you’re qualified to file for bankruptcy, making credit card payments is like throwing money down the drain. But if you’re still undecided or might not file your case for a long time, stopping your credit card payments can cause unnecessary damage.
Also, before you stop paying your credit card debt, you’ll want to be sure that you qualify for bankruptcy. Once you stop, fees add up quickly, and if you don’t file, it might be hard to bring your accounts current. So you’ll want to confirm that you pass the Chapter 7 means testthe test required to qualify for Chapter 7. Otherwise, you might have to file for Chapter 13and qualifying for Chapter 13 isn’t a given, either. Funding a Chapter 13 repayment plan can be too costly for many filers.
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How Can I Avoid Creditor Challenges
First, there is no rule about how long you will have to wait after making large purchases. In general, however, the longer the time between using the card and filing for bankruptcy, the better. If you use the card when youre in financial distress, the court may decide that you knew you wouldnt be able to repay it. Try to avoid using your card for at least 90 days before filing for bankruptcy.
If a creditor does try to prevent you from discharging your credit card debt in bankruptcy, you may be able to settle with the credit card issuer out of court. Lawsuits are expensive and time-consuming, and the credit card issuer doesnt want to go through the hassle of a trial any more than you do.
And even if the suit goes to trial, you can still win. Bring documentation showing that you thought you would be able to repay the debt.
