If you are faced with an overwhelming amount debt and are considering filing for bankruptcy, you may be asking yourself the question: What will bankruptcy do to my credit? This is a very legitimate concern and worth taking at. This article will address two different questions: What will bankruptcy do to my credit?, and What will happen if I do not file bankruptcy? Let’s begin with the latter.

What will happen if I do not file bankruptcy? If you are at the point where you are considering bankruptcy, you are most likely behind repaying your debts. You may have even gotten to the point where you are so overwhelmed that you have stopped paying all together. The effect of this is not only damaging to your credit score, but also dramatically increases the amount of debt you owe. The higher interest rates, late charges, and collections fees rapidly add up, making debt seem insurmountable. If a creditor chooses to file a law suit, you will be responsible for not only repaying the outstanding debt, but also covering court costs. This can quickly spin out of control. Not to mention the emotional toll of the constant phone calls and letters, and the ever present knowledge that you are in way over your head.

What will bankruptcy do to my credit? For the short term, bankruptcy has a negative impact on your credit rating. It is reported and stays on the report for seven ten years. During active bankruptcy, you cannot obtain additional credit, and after bankruptcy it is difficult to obtain credit, and when you do, interest rates are very high. However, over time, bankruptcy can actually help improve your credit score. Through secured credit cars and installment loans, you can re-establish a good credit history. You can prove that you are responsible with debt, and eventually will be able to qualify for lower interest rates.  It does not happen immediately, and may take years to fully recover, but it is not the disastrous situation that many believe it to be.

While it is wise to ask the question of what will bankruptcy do to my credit, a better question may be: Will bankruptcy help me have a fresh start and achieve my goal of responsible financial behavior? Bankruptcy allows the cycle of debt to stop. It allows for a way to repay your debts, while taking back control of your finances. It stops the calls, letters, and lawsuits. It is not a cure-all decision, and is by no means one that should be made without serious consideration, but many have found it to provide the relief they are so desperately seeking.

If you have reached the point where, despite your best efforts, you are unable to repay the debts you owe, it may be time to begin the steps to filing bankruptcy. Although it may seem like an overwhelming task, it is actually quite simple. It does have a negative affect on your credit rating, and stays on your credit report for seven to ten years, but it can also serve as a way to eliminate debt and have a fresh start. Because of the negative consequences, the decision to take the steps to filing bankruptcy is not one that should be made lightly, or emotionally. Take time to consider your situation, and then make a well-informed and practical choice.

Following is a list of the steps to filing bankruptcy:

1.     Determine if bankruptcy is the appropriate solution for your circumstances. Consider the amount of debt you owe and your income, as well as your future goals. This is a decision that you must make for yourself, but you should consider seeking advice to help you make the most informed decision possible.

2.     Determine which type of bankruptcy is best for you. Chapter 7 bankruptcy involves the liquidation of assets to repay outstanding debt. Chapter 13 bankruptcy allows you to keep your assets while restructuring the debt and arranging a repayment plan spread out over three to five years.

3.     Consult a bankruptcy attorney or petition preparer. Although it is possible to complete the steps to filing bankruptcy without assistance, you will most likely feel more secure if you have someone looking out for your interests.

4.     Gather required information. When submitting a petition, you must provide a list of all of the debts you owe, the name of the creditors, and the types of debt you have. You must also list your assets, including property, and the amount, source, and frequency of your income. Finally, you must provide a detailed list of your monthly expenses, including shelter, food, utilities, clothing, and medication.

5.     Submit required paperwork and pay related filing fees. The total cost to file a petition for Chapter 7 bankruptcy is $299. This cost includes the $245 filing fee, $39 administrative fee, and $15 trustee surcharge. The total cost to file a petition for Chapter 13 bankruptcy is $274. This amount is for the $235 filing fee and $39 administrative fee.

6.     Attend the meeting of creditors. This is the only formal meeting you are required to attend. This meeting allows the creditors to ask questions about your debt and make sure you have provided accurate information on your petition.

7.     Wait for the decision from the courts, and then adhere to any repayment plan that is determined.

Those are the steps to filing bankruptcy. It may seem like a long process, but the end result is a clean slate, relief from overwhelming dept, and a feeling of financial freedom and control. Many people find the end result worth anything that goes into it.

After you have gone through the process of filing for Chapter 7 or Chapter 13 bankruptcy, it is important to begin building your credit score and history. Restoring credit after bankruptcy should not be seen as optional, but more as a necessity or next step on the road to financial recovery.

Restoring credit after bankruptcy is not as difficult as you may imagine. The most important thing to remember is to prove that you can handle credit responsibly as soon as possible after the bankruptcy. It is important to determine what caused you to have to file bankruptcy in the first place, and make sure that you do not fall into the same patterns or make the same mistakes as before. Also, check to make sure your credit report is accurate. You want to monitor your credit report and be informed as to what is there.

After assessing your past habits and determining not to repeat them, and making sure your credit report is accurate, the next step to restoring credit after bankruptcy is to get a secured credit card that reports to the credit bureaus. It will be very difficult to get an unsecured credit card after bankruptcy, but a secured credit card allows you to rebuild your credit without risk to the creditors. With a secured credit card, you simply deposit the amount of money that you want to have available on the card, and then you use the card responsibly. Pay off the credit card balance every month, and this will help establish proof of responsible credit use.

Another way of restoring credit after bankruptcy is to take out an installment loan. Make sure the monthly payments are affordable and that you make the payment on time every month, without fail. Be prepared that when you first are taking out loans after bankruptcy, you will have very high interest rates. Over time, as you establish a better credit history and proof of responsible behavior, the loans can be refinanced with a lower interest rate.

If you are in the middle of bankruptcy, there is not much you can do for your credit. Be diligent to follow all the stipulations of the bankruptcy, and as soon as it ends, begin making positive changes. You have come through a difficult time and made the tough decision to file a petition for bankruptcy, and now is the time to embrace the fresh start and make positive changes. Restoring credit after bankruptcy will not only enhance your financial situation, but will also help you feel more in control of your spending, and more confident about your future. It is a long process, but the end result is definitely worth it.

If you have made every effort to repay money you owe to creditors, but still find that it isn’t enough, you may be eligible to eliminate debt with bankruptcy. By filing Chapter 7 or Chapter 13 bankruptcy, you can pay back, reduce, or even get rid of your debts, and get a fresh start financially. This can all happen without having to deal with creditors calling or sending letters, wage garnishment, or lawsuits.

Once you eliminate debt with bankruptcy, you have a newfound freedom and general sense of being able to breathe. Chapter 7 bankruptcy allows for the liquidation of assets to pay off existing debts. Chapter 13 bankruptcy restructures the debt so that you make regular, affordable monthly payments over a period of three to five years to pay back the money that is owed. Although either choice is a legitimate way to eliminate debt with bankruptcy, Chapter 7 requires that you take a means test to determine that you are unable to afford to make monthly payment, while Chapter 13 allows you to keep your assets while repaying the debt.

The decision to eliminate debt with bankruptcy is not one that should be made lightly, nor is it without consequences. A bankruptcy stays on your credit report for seven to ten years, making it more difficult to obtain credit in the future. During the time that a Chapter 13 bankruptcy is active, you are legally prohibited form incurring more debt. Although this is done as a safeguard to prevent you from adding to the amount you owe, many do not like feeling restricted financially.  And finally, all bankruptcy decisions are a matter of public record. If you file for bankruptcy, anyone can look up the case and see it. If you do not want to have this information made public, bankruptcy may not be the solution for you.

Bankruptcy should not be seen as an easy ticket out and therefore an excuse to behave recklessly and amass an overwhelming amount of debt. The bankruptcy code was created with the intent of helping those who have made an honest attempt to get out of debt. It was not created to encourage irresponsible behavior. In reality, though, most people who find themselves declaring bankruptcy are doing so due to circumstances largely beyond their control. And this is where the ability to eliminate debt with bankruptcy is seen as a welcome solution to a dire need.

No one wants to feel overwhelmed with debt. No one wants to deal with unending calls from creditors, wage garnishment, or lawsuits. Chapter 7 or Chapter 13 bankruptcy can be a way to end the disheartening cycle, get a fresh start, and take the first steps on the road toward financial freedom.

When researching the prospect of filing for bankruptcy, it is easy to become overwhelmed with the different types of bankruptcy available. Although there are six types of bankruptcy available, there are only two that individual debtors need to focus on, and those are Chapter 7 and Chapter 13 bankruptcy.

In Chapter 7 bankruptcy, all of the debtor’s assets are liquidated to repay outstanding debts. After this is done, all remaining debts are discharged, or erased. In order to qualify for Chapter 7 bankruptcy, you must take a means test. This means test determines whether or not your monthly income qualifies you for this type of bankruptcy. Your disposable monthly income must be below a certain amount. If you do not qualify for Chapter 7 bankruptcy, you may use Chapter 13 bankruptcy.

In Chapter 13 bankruptcy, you keep all of your personal property. The outstanding debt s restructured and is repaid over time, generally three to five years. During this time, the debtor is prohibited form incurring any more debt, and most disposable monthly income, including tax returns, is used to pay off debts.

Both types of bankruptcy require filing a petition with a bankruptcy court, are reported to the credit bureau, and are reflected on your credit report. The associated fees for Chapter 7 bankruptcy are a $245 filing fee, $39 administrative fee, and $15 trustee surcharge. The total cost to file a petition for Chapter 7 bankruptcy is $299. The fees for Chapter 13 bankruptcy are the $235 filing fee and $39 administrative fee, and the total cost to file a petition for Chapter 13 bankruptcy is $274. If your total monthly income is more than 150% below the poverty level, the fees will be waived. Chapter 7 bankruptcy remains on your credit report for 10 years, and a Chapter 13 bankruptcy remains on your credit report for 7 years.

Chapter 7 and Chapter 13 bankruptcy provide a way for a person who is overwhelmed with debt to have a fresh start. It allows for repayment of all possible debt, and also for forgiveness of some debt. Whether you have found yourself facing an insurmountable debt due to unforeseen circumstance such as illness or other hardship, or you are in the situation due to irresponsible choices, bankruptcy is a drastic step which will help you start over.

It takes time to repair your credit after filing for either Chapter 7 or Chapter 13 bankruptcy. You will face higher interest fees on loans, and it will be difficult to obtain unsecured credit cards. Over time, however, as you establish a good credit history and proof of financial debt management, your credit score will rise, and your interest rates will fall. Bankruptcy may be the first step out of debt and towards a brighter financial future.

Chapter 13 is the section of the Bankruptcy Code which allows the person filing for Chapter 13 bankruptcy to keep all of their property, and to repay the debts over a period of time. The debts are restructured, and are usually paid off in three to five years.

Another term for Chapter 13 bankruptcy is a “wage earner’s plan”. If a debtor has a regular income, he or she can set up a plan to make installments to creditors and pay all or part of their debts. During this repayment period, the creditors are forbidden by law from trying to collect on the debt.

A person is eligible for Chapter 13 bankruptcy if their unsecured debts are less than $360,475, and if their secured debts are less than $1,081,400. To begin a Chapter 13 bankruptcy case, a petition must be filed with the court. On this petition, the debtor must list all of their creditors and the type of debt, source of income and amount of income, all property, and a detailed list of all monthly living expenses, including shelter, food, utilities, and medicines. The court charges $274 to process the Chapter 13 bankruptcy petition. This fee includes the $235 case filing fee, and the $39 administrative fee. The court then takes the petition and works out a repayment plan. The debtor then makes the monthly payments according to the plan. In three to five years, the debts will all be resolved.

Many people who have found themselves overwhelmed with debt have turned to Chapter 13 bankruptcy as the solution. It helps them find freedom from the creditors, and gets them on the path to climbing out of debt.

Chapter 13 bankruptcy is not without its consequences, and those consequences should be carefully considered. The filing is listed on credit reports for seven years, often times making it difficult to obtain credit. Also, under Chapter 13 bankruptcy, the debtor is prohibited by law from obtaining any additional debt without prior permission, until all old debts are paid off. This aspect may actually be a benefit to many. It provides accountability, and prevents the debtor from climbing deeper into debt. Another consequence of the filing is that disposable income, including tax returns, must be used to pay off the debts. And finally, the bankruptcy case becomes a permanent public record. Intensely private individuals may choose to reconsider filing.

After weighing the pros and cons of filing for Chapter 13 bankruptcy, many debtors choose to proceed. It is a way to pay back outstanding debts while being released from the pressure of creditors, while having legal safeguards in place to prevent the debtor from incurring even more debt. Many have chosen this option as their first step back into financial freedom.

Chapter 7 Bankruptcy is a solution for someone who had made a good effort to pay off debts, but due to unforeseen circumstances has become overwhelmed with the debt and needs help to get a fresh start.

Chapter 7 is a section in the bankruptcy code which allows for the liquidation of assets. This means that a debtor can sell his or her assets and use the proceeds to pay creditors. Before filing for Chapter 7 bankruptcy, the debtor must sit for a means test. This test was created to help prevent people from defrauding the bankruptcy system. The means test is used to determine that the debtor does not have any way to repay the creditor. If the debtor qualifies for Chapter 7 bankruptcy, then the process begins. If it is determined that the debtor has enough income to make minimal payments on the debt, he or she may be referred to Chapter 13 bankruptcy which allows for restructured payment.

The process for filing Chapter 7 bankruptcy is rather simple. There is a petition that must be filled out and filed with the court. On the petition, the debtor must list all of their creditors, and the amount of debt and nature of the debt.  He or she must also list their source of income, amount of income, and how often they receive the income. And they must also provide a list of all property, as well as a detailed list of the monthly living expenses including food, shelter, transportation, medicine, etc. When the petition is filed with the court, the debtor must pay a total of $299 in fees. This includes a $245 filing fee, a $39 administrative fee, and a $15 trustee surcharge. If the debtor’s total income is more that 150% below the poverty level, the fees may be waived.

After the petition is filed and the fees are paid, the debtors are required to stop all collection attempts. The court makes the decision on the petition, at which time assets are liquidated, and outstanding debts are either paid or discharged. Once an a debtor has filed for Chapter 7 bankruptcy, that individual may not file again for eight years, and the bankruptcy is listed on your credit report for ten years.

The decision to file Chapter 7 bankruptcy is one that should be made only after careful consideration and evaluation of the debt to income ratio. If the debtor finds that he or she is unable to repay the debt and that there is no other viable solution, then the petition should be filed. It may seem like a drastic step, and it is, but it can help provide a fresh start, and a way to get out from the crushing burden of debt.

It is possible for the debtor to file for bankruptcy without a lawyer, but bankruptcy lawyers can help ensure that the proper paperwork and supporting information is submitted. Again, this is a decision that should be made by the debtor.

For people who have become overwhelmed with debt and are looking for a fresh start, bankruptcy is a viable solution. Filing bankruptcy can help those individuals decrease the amount of debt they owe, either by allowing them to liquidate their assets to pay off the debt, or assisting them in setting a manageable repayment schedule. Businesses can also benefit from bankruptcy laws….

Bankruptcy cases are handled in a federal court, and usually fall under one of three categories: Chapter 7, Chapter 11, and Chapter 13. In Chapter 7, assets are liquidated and the proceeds are given to creditors. Chapter 11 usually involves a corporation or a partnership, and facilitates the reorganization of debt to be paid back over time. Chapter 13 bankruptcy reorganizes debts for an individual. This allows the individual to hold onto their assets, and repay their debt in a certain amount of time, usually three to five years.

Although all bankruptcy cases are handled in a court of law, most people filing bankruptcy will have very little, if any, contact with a judge. In fact, the majority of the proceedings are done through a bankruptcy attorney. The only formal meeting a debtor must attend is a meeting with creditors. This meeting allows the creditors to ask questions regarding the debt, and someone filing Chapter 13 bankruptcy may have to appear before a judge at a confirmation hearing.

The modern bankruptcy law was put into practice following a decision by the Supreme Court in 1934. This decision stated, “[The law] gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” The federal government recognizes that unforeseen circumstances can make it difficult for a person to repay their debts, and allows for a way to help someone in that situation take a breath and start over.

Although it is possible for debtors to represent themselves in a bankruptcy court, most choose to enlist the services of a lawyer. The lawyer is able to file the petition and submit other required documents, and help walk them through the process.

Filing bankruptcy is a very personal decision, and one that should not be made lightly. There are consequences to bankruptcy, such as a negative credit report and the liquidation of some assets, but many feel that the fresh start provided by filing bankruptcy far outweighs the consequences. A debt counselor or lawyer can help answer questions, but ultimately it is up to the debtor to decide what the best course of action is.

We hear your concerns, translate your ideas and goals into legal action, and provide you with realistic expectations.