Will bankruptcy hurt my credit score?
Another common question of potential clients interested in filing for bankruptcy is whether or not a bankruptcy filing will hurt their credit/credit score. In most instances, consumers that are considering bankruptcy already have negative information on their credit reports, such as late or missed mortgage/installment payments, charge offs, and other negative collection activity. While a bankruptcy petition typically does not improve a credit score upon filing, the main purpose of a bankruptcy petition is to receive a ‘discharge’ of a person’s debts. A discharge is an order from the Bankruptcy Court preventing creditors included in the bankruptcy petition from attempting to collect on the underlying debt owed.
Creditors are strictly prohibited from attempting to collect on a discharged debt. As such, the discharge order from the Bankruptcy Court ‘wipes away’ the negative liabilities on one’s credit report. It is important to note that certain debts, such as child support, student loans, criminal fines and taxes are subject to certain regulations and are not always eliminated by the bankruptcy discharge.
While a creditor evaluating lending one credit can see a bankruptcy filing for up to seven to ten years, if an individual received a discharge the creditor will not have to compete for payment with all the other negative liabilities that have been cleared by the bankruptcy filing. The discharge order of the bankruptcy filing provides the consumer with a fresh financial start and allows them to rebuild their credit.
How Long Will Bankruptcy Stay on my Credit Report?
If you file either a Chapter 7 bankruptcy or Chapter 13 bankruptcy, it will appear on your credit report for up to ten (10) years. Even though bankruptcy remains on your credit report for up to ten (10) years, you can begin rebuilding your credit score right after the completion of your case. Making all debt payments on time after the completion of your case is imperative to rebuilding your credit score.
Another important factor to rebuild your credit is to keep your debt ratio low as compared to your available credit. Further, if you feel you could exercise restraint, getting a credit card in which you only make small charges to and pay the bill in full each month, could help you re-establish your credit. It is also important to monitor your credit report regularly to make sure the reported information is accurate.
While filing bankruptcy will not initially improve your credit score, it could provide you the fastest way to both a better financial future and credit score. If you’re making late payments or have accounts in collections, continuing in this cycle you will never be able to improve your credit score. Filing bankruptcy provides an avenue to address such negative activity on your credit report and enables a fresh financial start.
Overwhelmed with credit card debt or medical bills?
You may be overwhelmed with medical bills, credit card debt or even have a pending foreclosure or repossession. Don’t let that feeling stop you from getting back on track with your money situation. You can get that relief with filing bankruptcy. We offer free consultations and would love the opportunity to learn more about your matter to determine whether or not a Chapter 7 or Chapter 13 bankruptcy petition would be in your best interest. Upon filing of the bankruptcy petition, the Court enters an Order preventing any further collection activities by your creditors. The automatic stay provided by the bankruptcy filing is what gives you that AHHH HAAA moment of no more worries of creditor collection attempts. Let us help you with a bankruptcy filing today.
Bankruptcy Myths Debunked
A lot of people think that when you file for bankruptcy you can’t obtain any credit for seven to ten years. That is totally wrong. Filing for bankruptcy actually gets you a discharge of your debts and in most cases improves your credit score. It could allow you to buy the car or house you have been wanting but haven’t been able to because of your credit score and all the negative liabilities previously reflected.
If your credit cards are max out and being sent to collections or you have a account collection lawsuit, these are definite signs that you might need to consider filing a bankruptcy petition. Further, the filing of the petition is an act that is actually addressing your bill problems.
The Georgia Bankruptcy Attorneys of Carmichael Law Group would be happy to provide you a free consultation to see if a petition would be in your best interest.
Will I have to go to Court if I file Bankruptcy in Opelika, Alabama?
A common question of potential clients interested in filing bankruptcy is whether or not a court appearance will be required. The answer to the question is: Yes. Section 341 of the Bankruptcy Code requires all consumers that file a Chapter 7 or Chapter 13 bankruptcy attend a ‘meeting of creditors’ where the Chapter 7 or Chapter 13 Trustee will ask you questions regarding your assets and liabilities as reflected on the schedules already filed with the Bankruptcy Court. This is an informal proceeding where most questions are answered with simple “yes” or “no” answers (as long as the paperwork was prepared correctly prior to filing).
As such, it is important to make sure that the schedules prepared by your Bankruptcy Attorney are accurate so your ‘meeting of creditors’ will go smoothly. Speaking of your creditors, the Bankruptcy Code also allows this time for your creditors to ask questions regarding your schedules filed with the Court. Your creditors, however, are not allowed to ask questions such as: “Why are you filing for bankruptcy protection?” or “Why are you not going to pay me?” In most Debtors’ cases, no creditors will appear at the hearing. In any event, you should not stress about the Court appearance because you will be represented by your Bankruptcy Attorney.
If you live in Chambers, Lee, Macon, Randolph, Russell, or Tallapoosa County, your hearing will be held at the George W. Andrews Federal Building located at 701 Avenue A, Opelika, AL 36801.
We Can Help You Prevent Foreclosures!
Do you have a foreclosure sale date? If so and you want to remain in your home, you need to act NOW. In fact, a Chapter 13 bankruptcy can stop the foreclosure sale from ever happening due to the automatic stay provided by the bankruptcy filing. But, the Chapter 13 must be filed prior to the foreclosure sale so that is why it is so very important for you to call us right now if you already have a sale date. After filing, Chapter 13 allows you to pay you regular mortgage payments and put the past due amounts in a 3 to 5 year repayment plan.
Again, if you have a foreclosure sale date and want to remain in your home you need to give us a call or message us NOW! We offer free consultations and can do those by phone or in our offices in Opelika, AL, Dothan, AL or Columbus, GA. We want to help you stay in your home and can do that by helping you file a Chapter 13 bankruptcy petition.
Wage Garnishment in Alabama
Many people I meet with for bankruptcy consultations are concerned that their wages are going to be garnished because they have missed a few payments on their credit cards. This is certainly a legitimate concern. Although it’s important to understand that just because you have missed credit card payments your wages will not be garnished.
Credit card debt is unsecured – meaning that there is no collateral or property in which secures the loan. By contrast, a car loan or a house loan is a secured loan where the loan is secured either by the car or the house. If you stop making your car payment or your house payment the creditor can repossess your car or start foreclosure proceedings on your house.
Creditors Must Obtain a Judgment to Garnish Your Wages
With unsecured debts, however, if you miss payments or stop paying altogether generally the first things creditors do is increase your interest rates, tack on late fees, and report such non-payment to the credit bureaus. Your creditors may not, however, garnish your wages or levy your bank account unless they sue you in Court and obtain a judgment against you.
Without a judgment from the Court, your creditors cannot garnish your wages period! Typically, most creditors do not file a lawsuit until your card is 6 months or more delinquent. That is not to say that your creditors could not file a lawsuit when you first start missing payments, but usually they first attempt to collection calls and demand letters prior to hiring an attorney to sue you.
Bankruptcy Stops or Prevents Wage Garnishment
If you have been sued by creditor or if the company has obtained a judgment against you, you are NOW at risk of having your wages garnished or bank account seized. In Alabama, a creditor can garnish up to 25% of each and every paycheck.
The good news is, however, that a bankruptcy petition can stop or prevent a garnishment from happening. Upon the filing of a bankruptcy petition, there is an automatic stay that goes into effect that prevents any creditor included in your case from continuing collection activities. If you are at risk of having your wages garnished, give me a call so we can discuss your options and how to prevent wage garnishment.
Eliminating Taxes in Bankruptcy
If you have unfiled tax returns or you owe the IRS or Alabama or Georgia back taxes… a bankruptcy may be a viable option to get rid of that tax debt. Filing a bankruptcy petition could be a viable way for you to get the IRS or the state off your back for good! We can repay the taxes that you owe in a Chapter 13 Bankruptcy and in some instances discharge the tax debt in a chapter 7 all together without any payment.
If you have unfiled returns, you owe back taxes… get the taxes filed and come see Columbus, GA Bankruptcy Attorney Clarke Walker to see what your options are of getting rid of/addressing your tax debt once and for all!
Student Loans in Bankruptcy
Do you have student loans that are past due? A Chapter 13 Bankruptcy can help you have some breathing room during the 3 to 5 year period the case is open. While student loans are typically not dischargeable, during the pendency of your case, creditors are not allowed to attempt to collect from you due to the automatic stay. This gives debtors with student loans some breathing room from unwanted phone calls and the threat of garnishment. As such, if you have mounting student loan debt and just want a break from creditor harassment, Chapter 13 might be a great option for you.
Getting Scammed While in Bankruptcy: Fake Collection Emails and Phone Calls
Unfortunately, scammers prey on everyone. Even those in bankruptcy protection are not immune from falling victim to criminals out to make a quick buck.
The following scenario is one variation of how the scam works. Mr. Jones is currently in a Chapter 13 bankruptcy. One day, Mr. Jones receives an email from what looks to be a creditor’s attorney. The email threatens that if he does not pay a certain amount soon; he will be arrested and will go to jail. The email sounds legitimate enough – there is a case number and citation to law. Mr. Jones is sure that he disclosed all of his creditors in his bankruptcy filing, but is thinking that maybe he forgot one and he really does owe this debt.
Mr. Jones calls the number listed in the email and tries to find out more information. The person he is speaking to refuses to divulge any information and just demands money. Mr. Jones even tells the person that he is in bankruptcy. The scammer retorts that this is a criminal matter and outside of bankruptcy protection.
How is this a scam? First, having a debt is not a crime. The threat of arrest is just that – a tactic to scare you out of money. Second, debt collectors cannot contact you to collect a debt while you are in bankruptcy. Legitimate debt collectors are aware of the law and will cease any collection activities against you after they receive notice of your filing. Third, debt collectors cannot use misrepresentation. A collector who impersonates a lawyer or law enforcement officer is acting in violation of the Fair Debt Collection Practices Act (“FDCPA”).
Also, the “creditor” often does not exist. The scammer will hide behind a legitimate-sounding business name to lure you into thinking it is a legitimate company or law firm.
If you are in bankruptcy and get an email threatening arrest if you do not pay a ‘faux’ creditor money, your first step should be contacting your Opelika Bankruptcy Attorney. Your bankruptcy attorney will be able to quickly tell whether or not a scammer is trying to get fast money from you.
I’m married, but it’s just me filing for bankruptcy. Why do you need information about my spouse’s income and expenses?
The short answer to this common question is that the Bankruptcy Code requires an analysis of your currently monthly income. Currently monthly income is a mathematical calculation based on all of the household (meaning husband and wife) income of the Debtor in the 6 months before the bankruptcy is filed.
The six-month average of all household income is then compared to a family the same size as yours in your state. If your income falls below the median amount, you can usually file for Chapter 7 bankruptcy or pay nothing to your unsecured creditors in a Chapter 13 bankruptcy. If your income is higher than the applicable median, completion of the means test will determine whether or not you qualify for Chapter 7 bankruptcy or how much, if any, you will have to pay back to your unsecured creditors.
Since the law requires the inclusion of your spouse’s income to determine your currently monthly income, it also allows consideration for your spouse’s debt payments. Monthly debt payments are expenses such as car payments, credit cards, loans and other such debts that your spouse is solely responsible for every month.
Even though your spouse’s income and expenses are relevant to your bankruptcy filing, it does not mean that your spouse will be affected by your filing. Your spouse’s income and expenses are only needed to calculate the current monthly income of your household.
Again, this is general overview of why we need the non-filing spouse’s information. Your particular situation might be different, so contact our Opelika Bankruptcy Lawyers for your free consultation and we will be happy to address your particular concerns.
What Do I Need to Bring to My Free Bankruptcy Consult?
You’re facing a repossession or foreclosure… and you need to file for bankruptcy fast. These are the few things you should bring with you to your initial free consultation:
Last 2 years of your tax returns
Last 6 months of all your pay stubs and income: Social security, food stamps, or VA Disability.
Last 6 months of your bank statements
Make a list of all you creditors, their addresses, and how much you owe them.
Write down the VIN #, mileage, make, model, and year of ALL your property: car, house, mobile home, boat… ANYTHING that is titled in your name.
This will give you a head start on filing bankruptcy. We proudly help consumers with Chapter 7 and Chapter 13 bankruptcy petitions in Alabama and Georgia.
Call us TODAY if you need to file for bankruptcy 334-737-6311.
