What Happens To My Mortgage If I File Bankruptcy?

If you own a home and file bankruptcy, you can keep your home and mortgage secured by the mortgage. Depending upon whether you file Chapter 7 or Chapter 13, the course of events that follows the filing of the bankruptcy will be slightly different. One analysis which must be done relates to the equity in your home. Generally speaking, you are allowed $35,000.00 in equity per spouse to keep a home in Chapter 7. This known as an Exemption. In Chapter 13 you can have additional equity beyond those limits; however, it will affect your Chapter 13 payment.

Your Mortgage In Chapter 7

If you own a home with a mortgage and you file Chapter 7, it is important that you are current on your mortgage upon filing the Chapter 7, or by the time of the 341 hearing at the very latest. If you wish to keep the home in Chapter 7, you will continue to make mortgage payments to a bankruptcy department at the mortgage company while the Chapter 7 case is active. Once the case closes, you will resume making payments to the mortgage company in the same manner you did prior to filing.

It is important to note that the filing of a bankruptcy technically discharges the debt (mortgage); however, unless you are planning to surrender the property in bankruptcy, you will need to continue to make mortgage payments.

Unlike reaffirmations for car loans, mortgage debt is very rarely reaffirmed in bankruptcy. Courts frown upon it in an attempt to protect debtors who have recently received a discharge from substantial debt. The American Bankruptcy Institute has written at length about this stance.

If you do not reaffirm your mortgage, provided you stay current on mortgage payments post-bankruptcy, the mortgage lender has no recourse. You keep the house as long as you keep making payments. You receive credit against your balance for all of your payments, and you build equity presuming the value of the house continues to increase.

One downside to not reaffirming a home is that the mortgage company will not report your payments to the credit bureaus. Your remedy for this is to send a letter once a year to each credit bureau indicating the payments you have made. If the creditor fails to file a response disputing that you made the payments, you will get credit for the payments on your credit reports.

One tremendous upside to not reaffirming a mortgage in Chapter 7 is that if you lose your job, the house value is ‘upside down’ in the future, or for any other reason you wish to walk away from the house (and the debt) you can do so. The lender is limited to receiving the property as their only recourse. They can not pursue you for any remainder debt on the home in the event they sell it for less than what you owe on it.

Your Mortgage In Chapter 13

In Chapter 13, you can also keep your home and mortgage, provided you continue to make payments as usual. Additionally, may clients use Chapter 13 as a way to force the lender to let them catch up on missed payments. Your Chapter 13 plan will propose to pay the normal mortgage amount, plus a small amount each month for the purpose of catching up on missed payments over a 60 month period. When the Chapter 13 bankruptcy closes out after 60 months, your mortgage will be deemed current.

Due to the ability to use Chapter 13 for the purpose of catching up on missed payments, many clients use Chapter 13 to avoid a foreclosure. A Chapter 13 can even be filed as an emergency filing, in order to stop a foreclosure. So long as you make ongoing payments in Chapter 13 under your confirmed Chapter 13 plan, the mortgage lender has no choice but allow the Chapter 13 to move forward. Additionally, you will be obtaining a discharge of unsecured debt in Chapter 13.

Old Mortgage Debt In Bankruptcy

If you have old mortgage debt on your credit, a Chapter 7 or Chapter 13 filing will address that debt and your discharge will include it. If your current mortgage is a burden you can surrender your current real estate to the lender in bankruptcy, and the lender will be limited to the home as repayment of their debt– the bankruptcy filing will prevent them from pursuing you as an individual if the sale of the property leaves a remainder balance on the mortgage debt.

Speak With A Bankruptcy Lawyer Today

If you are facing foreclosure, or would like to consider bankruptcy for another reason, we are here to help. Our clients who own real estate are able to file bankruptcy every day while keeping their home. We can show you how. If you would like a consultation you can call 704.749.7747 to speak with an attorney today. Or you can click HERE to request a consultation. All consultations are free and can be done over the phone. We know you have choices. We hope you choose Layton Law.

 

Credit Cards To Help Build Credit

If you are looking for credit cards to help build credit, then you are thinking about your future. If your credit is already damaged, you may not be able to obtain a traditional credit card for the purpose of rebuilding your credit. In that case, the easiest way to build credit with a credit card is to obtain a secured credit card.

Secured Credit Cards And Building Credit

With a secured credit card, the user places a security deposit down when opening the account. The bank holds the deposit until the account closes. While this may feel like fictitious credit, remember that your goal is to rebuild your credit.

With a secured credit card, each month you place a few new charges on the card. Then, at the end of the month, you pay them off (or make the minimum payment). So long as you make your payments on time, the issuing bank will report to the credit bureaus for you. Those reported payments appear on your credit report the same way that unsecured card payments appear on your credit report. As a result, as you continue to make on time payments over the course of many months, your credit score builds simultaneously, and the secured credit card helps build your credit. An article by Nerd Wallet lists some of those most popular secured credit cards.

Bankruptcy And Your Credit Score

While it is true that a bankruptcy filing will initially lower your credit score, the individual planning for the future should consider bankruptcy as a way to discharge insurmountable debt. On the heels of your bankruptcy filing, your credit score will begin building again. First, after bankruptcy, you can apply for the secured credit cards mentioned above. Second, your debt to income ratio improves in your favor—even though your income has not increased, your debt has gone down dramatically. Finally, traditional lines of credit begin to open to you within six months after your bankruptcy discharge is entered.

Our clients routinely report to us in the first year after bankruptcy that they receive offers for vehicle financing and credit card offers. At the two year mark following bankruptcy, clients often reach out to us for a copy of bankruptcy paperwork to provide to their mortgage lender. This means that two years after the discharge in bankruptcy is entered, clients are getting approved for a mortgage. This is incredible news.

Bankruptcy And Your Credit Report

While bankruptcy can remain on your credit report for up to ten years. This is true. Most of the credit bureaus remove it after seven years. In any event, what you do with your credit after bankruptcy carries more weight than the bankruptcy remaining on the credit report. Remember, clients are getting mortgages two years after filing bankruptcy. By taking careful steps to build credit post-bankruptcy, you can negate the fact that the bankruptcy remains on your credit report for several years.

Bankruptcy And Credit Cards To Help Build Credit

If you exercise your right to file bankruptcy,  you get the benefit of discharging your unsecured debt. When you combine a Chapter 7 or Chapter 13 filing with active steps to rebuild credit with secured credit cards immediately after filing bankruptcy, you are on your way to achieving your financial goals.

Speak With A Charlotte Bankruptcy Lawyer Today

If you would like to speak with a lawyer about secured credit cards, bankruptcy, or any other aspect of building your credit, please reach out to us at 704.749.7747 or click HERE to request a free phone consultation. We know you have choices. We hope you choose Layton Law.

When Does Bankruptcy Fall Off Your Credit Report?

This is a great question and shows an eye toward the future. The good news is that you will be extended credit much sooner than the date by which the bankruptcy will fall off your credit report. In this article, we will touch base on the timeline for when bankruptcy falls off your credit report, and also try to give some indicators as to when you can expect to be extended credit after filing bankruptcy.

Your Filing Date and Chapter Filed

If you filed Chapter 7, it will be 10 years after the filing date before the bankruptcy falls off your credit report. If you file Chapter 13 it will be 7 years after the filing date of your bankruptcy. One thing that may affect this timeline is your original delinquency date on the debt. If an account was delinquent upon filing, it will be deleted from your credit report seven years from the original delinquency date. It is noteworthy that filing bankruptcy does not extend the original delinquency date or change the date by which the account will remain on the credit report, per an article by Experian.

When Can I Get Credit Again?

The desire to know when you will be able to get credit again makes sense. We know you’re interested in getting credit after bankruptcy because you have a goal of rebuilding your credit score. If you filed a Chapter 7, you will typically be able to get credit again about three months after your discharge is entered. Interest rates will be high but if your goal is to build your credit score, you should focus on charging some items each month and paying the balance each month. This way, you are not paying interest.

If you filed Chapter 13, it will be about three to five years from the date of your filing. This makes sense, as Chapter 13 is typically a 36 or 60 month plan. Many of our clients qualify for new automobiles and refinances during an active Chapter 13. Hopefully this helps to demonstrate that you will continue to have access to credit even after filing bankruptcy.

When Can I Qualify For A Mortgage After Filing Bankruptcy?

According to Realtor.com you will need to wait two years after bankruptcy in order to qualify for mortgage lending. This matches with what we see over and over from our clients as well. Consider what an amazing solution this is—you file your bankruptcy, receive a discharge of thousands of dollars of debt, and two years later you are back in the home purchasing market. This gives us and our clients tremendous excitement for the future as we work together to prepare their bankruptcy filing.

Speak With A Bankruptcy Lawyer Today

As you can see, even if your focus is when bankruptcy fall off of your credit, the truth is you will have access to credit much sooner than the number of years it takes for bankruptcy to no longer show on your credit report.

If you’d like to speak with an attorney about filing bankruptcy, call us at 704.749.7747 or click HERE to request a consultation. If you’d like to hear a little bit more about our firm, you can watch Chris Layton in a one minute introduction video. We know you have choices. We hope you choose Layton Law.

Debt Consolidation For Credit Cards

If you are considering debt consolidation for credit cards, you need to read this blog post. First, it is important to know there are a few ways to consolidate your credit card debt. Each program being offered will be different. In any case, first we will quickly go over the different types of debt consolidation, and then discuss a few pitfalls and other options.

Types Of Credit Card Debt Consolidation

Balance Transfer – When you do a balance transfer you are essentially transferring several credit card balances to one credit card. It could be due to a low introductory rate, or some other special terms, which are more favorable than the prior card or cards.

Debt Consolidation Loan – Some banks will offer you a loan which you can use to pay off your credit card debts. You will be left with one balance on the loan, and usually at a lower interest rate than the credit cards you paid off.

Debt Management Program – This is the most traditional form of debt consolidation. In this instance, you work with a credit management company. They establish a payment structure for you and a timeframe. The credit management company negotiates with your creditors to lower your balances. Usually, the negotiated amount is contingent upon you completing the consolidation plan.

Three Common Pitfalls To Credit Card Debt Consolidation

Fees And Costs – Whether the fees come in the form of high interest or third-party fees charged by your credit card management company, it is important to understand what fees you are being charged. The lengthy contracts consolidation companies provide you with can be difficult to sort through. The point is you are paying for a service. You are entitled to know how much the service is costing you. This way, you can comparison shop and set your bottom line for how much it is costing to eliminate your debt.

Dropping Out Of The Consolidation Program –

Many debt consolidation agreements are contingent upon your completion of the term. The term may be for three or more years. During that timeframe, anything could happen which might prevent you from being able to make your payment on time. You want to be aware of the penalty for late or missed payments, and get confirmation that you will not lose the progress you made along the way by making consistent on time payments in the program.

Worrying Too Much About Your Credit Score –

It is important to be concerned about your credit score. You should think carefully before spending thousands of additional dollars for the sole purpose of sparing a few credit score points. As a bankruptcy attorney, I speak with clients every day who are worried about their credit score. I do my best to help them see the full picture. Often, those clients already have a reliable vehicle and own a home. If that is the case, I encourage them to look at the upside to eliminating the debt—no matter how they choose to do it—instead of obsessing over how it will affect their credit score.

What Other Options Are There?

Bankruptcy is worth considering. Both Chapter 13 and Chapter 7 are options in consumer bankruptcy. Every bankruptcy attorney I know in Charlotte, North Carolina will give you an honest answer as to whether you should file bankruptcy or not. This means you should consider having a free consultation with a bankruptcy lawyer to make sure you understand the cost of bankruptcy versus the cost of debt consolidation. If a client can eliminate $25,000 of unsecured debt by filing a bankruptcy for under $3,000, it is going to be difficult to justify a debt consolidation program which charges $525 a month for 36 months.

Debt settlement is another option. Because we are bankruptcy law firm, we obtain good results for clients attempting to settle debt. When you are settling a debt with a creditor, you are proposing to pay them a small portion of the debt in 90 days or less, in exchange for forgiveness of the remainder of the debt. To accomplish this, you must have access to a lump sum of money to pay the creditor. It is not uncommon to receive a dramatic reduction from the outstanding balance in exchange for timely payment of a small percentage of the debt. In a prior post, we have discussed how a debt settlement affects your credit score.

Speak With A Bankruptcy Lawyer Today

If you are considering consolidating credit card debt, you deserve to understand all your options. We would be happy to discuss bankruptcy, debt settlement, and credit card consolidation with you. Then, we can help you make the decision that will work best for you. Sometimes, just one phone call is all it takes to discover you have more control over the situation than you thought.

If you would like to speak with a bankruptcy attorney, call us at 704.749.7747 or click HERE to request a phone consultation. Consultations are free and answering questions is part of our job. We are here to help.

Does Bankruptcy Ruin Your Credit?

No, bankruptcy does not ruin your credit. In fact, bankruptcy may ultimately be the reason you are finally able to restore your credit. We understand your credit score is an important factor in deciding whether to file bankruptcy. While the initial filing of a bankruptcy will temporarily lower your credit score, most debtors find that their score recovers within a year from filing bankruptcy.

Your Debt To Income Ratio

One important aspect of your credit score is your debt to income ratio. The filing of a bankruptcy changes your debt to income ratio in your favor. This immediately serves to help you re-build your credit. Additionally, as a result of your bankruptcy, your credit report will show fewer debts. You become an attractive client to creditors when your debt to income ratio is healthy. This means you will be considered for credit cards, automobile loans, and other extensions of credit.

How Quickly After Bankruptcy Will My Credit Score Recover?

Most of our clients tell us that their credit score bounces back at the one year mark from filing bankruptcy. However, this will fluctuate depending upon how high your score was before filing bankruptcy, and depending upon the steps you take to rebuild your credit after bankruptcy. If you are making payments on a secured credit card or a vehicle after bankruptcy, those positive payment reports will serve your credit score well.

Free Yourself From The Chains Of Credit Card Debt

Credit card companies want you to fear bankruptcy. They would rather you give them every extra penny you have, to keep them from taking further action against you for non-payment. This is true regardless of whether your monthly payment to them makes even the slightest dent in the balance owed.

The bigger picture when deciding whether to file bankruptcy involves regaining your financial freedom. The relatively small price to pay for that financial freedom is the time it takes to rebuild your credit. When bankruptcy clients call us two years after their bankruptcy to tell us they have gotten approved for a home mortgage, they usually tell us the same thing: I never should have waited as long as I did to file my bankruptcy.

Speak With A Charlotte Bankruptcy Lawyer Today

If you have questions about how bankruptcy can help your credit, we are here to help. Once a client decides to file bankruptcy, we advise you stop paying on any debt which will be discharged by the bankruptcy. If you would like to speak with a bankruptcy lawyer, call us at 704.749.7747 or click HERE to request a free consultation by phone or in person.

 

5 Myths Surrounding Bankruptcy

Bankruptcy is surrounded by myths, and they keep eligible individuals from pursuing what can be an amazing way out of crippling debt and financial stress. You deserve freedom from the anxiety caused by the myths surrounding bankruptcy. We hope this article helps. And if you have any questions, we’re here to answer them. Just reach out to us.

#1 All Bankruptcy Filings Are The Same

To understand and debunk some of the myths about Chapter 7 bankruptcy, we must first understand how Chapter 7 bankruptcy differs from Chapter 13 bankruptcy. While both are consumer bankruptcy options, Chapter 7 bankruptcy is typically used in a situation where the client has limited income and assets, and does not have the ability to pay back all or even some of their debt. Chapter 13 bankruptcy is a tool for catching up on a delinquent secured debt like a mortgage or car. It is also a compromise where you pay back some of your debt while completing a court approved repayment plan.

#2 Bankruptcy Will Stay On My Credit Report Forever

While effects of a Bankruptcy on your credit report can vary due to the case, the credit reporting of a Chapter 7 bankruptcy lasts a maximum of ten years. Some credit reporting agencies remove the bankruptcy after seven years. Some of these credit report references to bankruptcy include trade lines that state that your account was included in bankruptcy, and third party collection debts, judgments, and tax liens discharged through bankruptcy. More importantly, your credit score and your ability to get a loan or credit card recovers much faster than this time frame. We see this with clients year after year.

#3 My Credit Score Won’t Improve Until The Bankruptcy Is Gone From My Credit Report

While your post-bankruptcy credit score will show a drop after filing, you will be surprised at how quickly your credit score begins to recover. One reason is that by way of the bankruptcy, your debt to income ratio improves in your favor. Additionally, creditors are more likely to lend you money because they know you have no other debt, and they know you can’t file bankruptcy again. Often, the same creditors you included in your bankruptcy filing will offer you new extensions of credit shortly after you file.

Obtaining a secured line of credit and making payments on it, or taking out a new credit card and making payments on it, will help you to raise your credit score with the goal of hitting the range of 700-749 over time. Making on-time payments for all debt, adding and paying new credit, and keeping your credit card balances under a thirty percent utilization are all examples of ways to boost your post-bankruptcy credit score.

#4 I’ll Never Have Credit Cards Again

While we secretly hope this is true for you, we hope it’s because you choose to never have a credit card again. The truth is, as this article has indicated so far, you’ll be given lots of opportunities to have a credit card after filing bankruptcy. Truthfully, credit cards are actually one of the best ways to build credit, and options for those post-bankruptcy do in fact exist.

Credit cards that require an upfront security deposit, are called secured credit cards and have a lower barrier of entry but allow you to spend and rebuild credit just like any other kind of credit card. After you make consistent payments on a secured credit card, you will see your credit score increase and other credit opportunities arise.

#5 I’ll Never Get A Home Loan After Filing Chapter 7

Similar to credit cards, when paid on time, loans help you to rebuild your credit score and certain loans are easier to receive after having filed bankruptcy. Credit builder loans, CD loans, or Passbook loans, are similarly secured with a deposit or collateral and will all help to rebuild your credit score. These loans are easier to procure due to the simple fact that the lender is protected in the event that you are unable to pay, which makes them a great opportunity to rebuild credit score in the meantime. If you’re repaying a vehicle loan, you’ll also see the benefits by way of an increase in your credit score.

Generally, at the two year mark after filing bankruptcy, our clients who have diligently re-built their credit after bankruptcy, find they are eligible for a mortgage. A more conservative estimate would be two to four years; however, we receive so many phone calls at the two year mark from clients who are excited because they are buying a home, that it’s worth mentioning here.

Speak With A Charlotte Bankruptcy Lawyer Today

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article regarding myths surrounding bankruptcy was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful.

 

What Does Bankruptcy Do To Your Credit Score?

Bankruptcy affects your credit score differently, depending upon what your credit score is just prior to filing. You can expect that your credit score will drop after filing bankruptcy, but it will also recover quickly if you take the right steps after bankruptcy to increase your credit score.

If your credit score is above 650 before filing bankruptcy, you can expect a significant drop in your credit score, according to Experian. However, you should remember that your purpose for filing bankruptcy is less related to your credit score and more related to being able to balance your budget. You can recover your credit score after the debt is gone.

If your credit score is below 650 before filing bankruptcy, you can expect your credit score to drop but not in a significant way. In fact, your credit score will bounce back within a year from filing the bankruptcy and go up from there.

Does Chapter 7 Affect My Credit Score Differently Than Chapter 13?

When it comes to your credit score, it does not matter what chapter of bankruptcy you file. Some clients feel better about filing a Chapter 13 than a Chapter 7 because in a Chapter 13 you are paying back some of your debt. We encourage clients to file the chapter of bankruptcy that makes most financial sense for them. We help you to make that decision, of course.

Improving Your Credit Score After Bankruptcy

Keep in mind that while filing bankruptcy lowers your credit score, you will also get a bump up in your score when your debt to income ratio changes. While filing bankruptcy doesn’t change your income, it does change your debt. As a result, your “debt to income” ratio changes in your favor. This is one of the key factors used to calculate your credit score.

Once your bankruptcy case closes, the key to improving your credit score is to make payments to creditors who will report your payments to the credit reporting agencies. Most commonly, mortgage payments and vehicle loan payments are a way to do this. If you do not own a home or car, you can take out a secured credit card at a local credit union. This is a quasi-credit arrangement where you give the credit union a small amount of money. Then, each month, you spend or borrow against that money by making purchases on the card. When the monthly statement comes, you pay it off. In exchange, the credit union will report your payments as positive payments to the credit agencies and it will help build your credit.

Speak With A Charlotte Bankruptcy Lawyer Today

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article regarding “What does bankruptcy do to your credit score?” was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful.

 

Should I File Bankruptcy?

We know this is a common question: “Should I file bankruptcy?” We know the idea of filing Chapter 7 or Chapter 13 bankruptcy can be daunting. The decision may bring up feelings of guilt or fear or even shame. Our very strong advice is to ignore those things and focus on you and your family. Bankruptcy is an extremely powerful form of relief which can dramatically change your life for the better.

Myths Surrounding Filing Bankruptcy

There are a few myths surrounding filing bankruptcy. It’s worth it to make sure you know the facts. Here are a few things that keep people from filing, when they deserve the relief of bankruptcy:

Nobody Else Files – This just isn’t true. In fact, statistics show us how many people have filed bankruptcy between 2006 and 2017. All types of individuals file bankruptcy, including lawyers, doctors and politicians. Like you, they are often a victim of bad circumstances. Bankruptcy represents a solution.

Everyone Will Know I File – This is not true. While the filing is technically public knowledge, it is a federal filing. We get calls from lawyers every week asking us to use our login to access a bankruptcy filing. This should tell you that it’s not that easy to find a list of people who have filed bankruptcy. Your neighbors won’t know.

My Employer Will Know – Generally, your employer is not made aware that you filed bankruptcy. If you have a job which requires you to be bonded for handling large sums of money, we make sure to discuss that with you; otherwise, we have yet to have a client report back to us that they have had problems with their employer. If you are ever in a position to discuss your bankruptcy, your response is an easy one: I did the best thing for myself and my family, and things are much better now.

My Credit Will Be Ruined If I File Bankruptcy – Not true. For most individuals, your credit will drop about 75 points when you file. About a year after filing, your credit score will be back to what it was right before you filed. From there, it should only go up. We provide all of our clients guidance regarding credit score repair as well.

I Won’t Be Able To Buy A Car – Not true. Within the first year after filing bankruptcy, you will receive offers for vehicle financing. Should I file bankruptcy if I could never buy a car again? Probably not. But you’ll find that’s just not true.

I’ll Never Have A Credit Card Again—Not true. You’ll receive plenty of credit card offers from the same banks whose debt went away in bankruptcy. Another reason why you shouldn’t lose sleep over banks not getting paid if you file bankruptcy.

Overcoming Feelings Of Guilt

We know guilt is a real feeling. If you listen to any motivational speakers, they would acknowledge guilt as an obstacle between you and your goal of financial freedom. Many motivational speakers tell you that in order to overcome an obstacle, you should focus on what happens if you DON’T take action. The fear of that will usually be enough of an incentive to help you overcome the obstacle. During conversations with our clients we focus on the client, their family, and the future. If bankruptcy is going to provide the refresh necessary to kick start a great future, we encourage the clients to ignore guilt.

Speak With A Bankruptcy Lawyer Today

If you’re considering filing bankruptcy, it helps to speak with someone. That’s why we’re here. Call us today at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly. The future is bright—bankrutpcy could be a crucial step to making it a reality.

Does Debt Settlement Affect My Credit Score?

Yes, you can expect that a debt settlement will negatively affect your credit score. Most reliable sources such as Experian.com, and Creditkarma.com indicate that if your credit score is 700 or higher, you should expect roughly a 150 point decrease in your credit score by settling a debt. If your credit score is 650 or lower, you should still expect your credit score to go down, but not as dramatically.

How Do Creditors Report Debt Settlement?

Creditors report debt settlement to credit bureaus or credit agencies. As a result, the settled debt will show on your credit report as Settled or Paid Settled. FICO released hypothetical scenarios addressing situations where individuals with different credit scores settled their debt. They are below

Scenario #1: 680 Credit Score

If you have a credit score of 680, you will lose roughly 45-60 points on your credit score by entering into a debt settlement. This assumes you have roughly 40-50% credit utilization, eight years of credit history, and no accounts in collections. These assumptions are simply meant to simulate an “average situation”.

Scenario #2: 780 Credit Score

If you have a credit score of 780, under the FICO hypothetical, you will lose roughly 140-160 points on your credit score by entering into debt settlement. Again, the assumption being you have similar credit history and activity as the person above with a 680 score.

Predicting How Debt Settlement Affects Your FICO Score

You can purchase your FICO score at myFICO.com and when you do, you can use the FICO simulator tool on their website; however, if you’re considering filing bankruptcy we recommend you focus on your financial health and less on your credit score. Your credit score will bounce back—in the meantime, bankruptcy or debt settlement can help you immediately restore financial peace in your life. Lastly, when you make a deposit with our firm to file bankruptcy, we purchase your credit reports for you.

Speak With A Debt Settlement Attorney Today

If you’d like to discuss debt settlement, you can reach us at 704.749.7747. The consultation is free and we can also answer any bankruptcy related questions you might have. Making a phone call is the next step you can take toward financial freedom. We’re here to help. You can also request a FREE CASE EVALUATION and we will reach out to you.

Bankruptcy Or Consolidation?

If you are overwhelmed by the choice between bankruptcy or consolidation, there is great news: you have options. Most individuals wait much longer than they should before exercising their options regarding debt—do yourself a favor and act now. The solutions are powerful and the relief is immediate.

Debt Consolidation

Clients who have one looming debt, or smaller debts which are causing problems can consider bankruptcy or consolidation. Generally, debt consolidation combines your debts into one loan. You can accomplish this on your own with a personal loan or a home equity line. You can also hire a debt consolidation company to handle bundling your debt into one payment. If you enter into an agreement with a debt consolidation company, you will typically pay one party each month—the debt consolidation company. However, there are pitfalls associated with working with debt consolidation companies.

Pitfalls Of Debt Consolidation

Debt consolidation companies offer confusing, lengthy contracts which often promise very little to you. We consistently work with clients who believed their debt consolidation company had bundled all of their debt, only to find out it wasn’t true. Those clients make consistent payments and hold up their end of the deal. At the end, they find out there are still one or more credit card balances that remain unpaid. This is a horrible result! Finally, debt consolidation companies consistently remind you they are only estimating the arrangements they can reach with your creditors. In the end, their promises often go unfulfilled.

How Is Debt Settlement Different From Debt Consolidation?

One option in addressing debt is debt negotiation which leads to debt settlement. As a bankruptcy law firm, we have had success negotiating debt for our clients. Our strategy is to show the creditor that we are working with the client to file bankruptcy, which is true. However, in many cases the client would rather settle a debt than file a Chapter 7 or Chapter 13 bankruptcy. This is also true. In the end, the creditor is faced with the option of getting paid little to nothing in bankruptcy, or reaching a fair negotiated agreement with our firm.

The downside to debt settlement is that not all clients have the funds available to successfully engage creditors in negotiations. To reach your best negotiated agreement, the creditor will want the new lower balance paid off very quickly. They are not interested in lowering the balance AND accepting a series of monthly payments extending more than a few months.

Bankruptcy Is Often The Way To Go

If you’re trying to choose between bankruptcy or consolidation, let us help. Filing bankruptcy is one of the most powerful options a consumer has at their disposal. The amount of money you will spend to negotiate one credit card will often exceed the full bankruptcy fee to your bankruptcy attorney. Additionally, you address numerous debts at once. While clients have concerns about credit scores and keeping vehicles or homes, a free phone consultation usually puts the client at ease.

Final Thoughts On The Bankruptcy Or Consolidation Decision

First, we understand bankruptcy is foreign to most individuals. Second, we know there is stress and anxiety associated with debt and the mystery of filing bankruptcy. Lastly, we have seen over and over how our client’s lives change for the better simply by deciding to file bankruptcy. In fact, bankruptcy will change your life for the positive.Most bankruptcy filings usually end with the client giving the lawyer a hug—that should tell you a lot about the relief you will experience if you decide to file.

Speak With A Bankruptcy Lawyer Today

If you’d like to speak with a Charlotte bankruptcy lawyer today, we’re here to help. We are happy to discuss bankruptcy, debt consolidation, or debt negotiation. Part of the job is answering questions. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION. We know you have choices. We hope you choose to Recover With Us.