Tag Archive for: credit score

Downside Of Filing Bankruptcy

Clients routinely ask “What is the downside of filing bankruptcy?” While there certainly is a downside to filing bankruptcy, a thorough review of most clients’ financial situation reveals that bankruptcy is the right financial move for them. This article will the downside of filing bankruptcy, but also help to put it in context. As a Charlotte bankruptcy attorney, my goal is to help you decide what’s best for you and your family.

Effect of Bankruptcy On Your Credit Score

Bankruptcy will no doubt affect your credit score. However, this is usually only a concern for those with perfect credit scores coming into bankruptcy. That situation is rare. More often, a client’s credit score is already low due to late payments, missed payments, repossessions, foreclosures, or other financial issues.

The good news is that for most individuals, your credit score one year after filing bankruptcy will be as good as it was on the day you filed. In other words, one year after filing, your credit score has already recovered and you no longer have the debt issues you had before filing. From there, it’s easy to rebuild your credit if you’re intentional about it. Our firm always offers tips on rebuilding credit after bankruptcy, and they do make a difference.

Effect of Bankruptcy On Credit Cards

When you file bankruptcy, you can’t keep “a few credit cards.” All of your credit cards will be canceled upon filing. The good news is you’re no longer living on credit cards. A common question arises regarding having a credit card for emergency purposes. Most clients report to us that credit card companies offer them credit soon after they receive their discharge in bankruptcy. The reason is the bankruptcy filing improved your Debt To Income ratio and made you a great candidate for credit cards. Additionally, creditors like extending credit to individuals who recently filed bankruptcy because they know you’re more likely to repay the debt. After all, you can’t file bankruptcy again for a long time.

Effect of Bankruptcy On Getting A Mortgage

It’s true, you won’t be able to obtain a mortgage for two to four years after bankruptcy. However, you have to ask yourself if you could obtain a mortgage with your current credit score and debt situation. Most clients can’t. So while the intention to purchase a home is a good one, filing the bankruptcy is the first step in the right direction. During the two-year waiting period, you can save for a down payment or pay down student loans, or contribute to your 401k. You won’t fall behind by filing bankruptcy.

Not All Debt

Bankruptcy does not discharge all debt. Some debt takes priority and survives a Chapter 7 or needs to be paid in full in Chapter 13. For instance, Child Support, Recent Taxes (less than 3 years old), Mortgage Arrears, and Student Loans. Clients report that filing bankruptcy and eliminating credit card debt and medical debt, as well as other types of debt, enables them to focus on re-paying the types of debt which do not go away with a bankruptcy filing.

Speak With An Attorney Today

We know deciding to file bankruptcy is an important choice. We tell some clients it’s not a good choice for them. We’re happy to hear your story and help you decide. We know you have choices. We hope you choose to Recover With Us. If you’d like to speak with an attorney today, call 704.749.7747 or click for a FREE BANKRUPTCY CONSULTATION and we’ll give you a call or reply to your email.

If you’re asking yourself “Is bankruptcy right for me?” most likely, the answer is yes. We work every day with hard-working individuals who simply can’t keep up with growing medical debt, credit card debt, or mortgage problems. Bankruptcy offers a powerful solution that is life-changing.

When a potential client is wondering “Is bankruptcy right for me?” we encourage them to look more specifically at a few areas of their financial life, in hopes of helping them find an answer. Typically, our bankrupt clients have spent years trying to pay off credit card debt. Unfortunately, the interest rates, late fees, and penalties make it all but impossible. The banks will survive if you file bankruptcy. Our biggest concern is the health of you and your family.

How Expensive Is Bankruptcy

We are very much aware that when you’re having trouble making ends meet, the idea of paying a law firm for bankruptcy can be overwhelming. Fortunately, most clients find the fee for bankruptcy is reasonable. Additionally, once you know you’re going to file bankruptcy, you can stop making payments on debt that will be discharged in bankruptcy. This includes medical bills, credit card debt, and often tax debt. If you’d like to request a free quote for bankruptcy, click here: FREE BANKRUPTCY QUOTE.

How Immediate Is The Relief

The day you file your bankruptcy papers with the federal court, your creditors will be sent notice of the filing. This means they can no longer contact you in an attempt to collect a debt. It also means any legal actions including foreclosure and writs of execution, are automatically frozen by the Automatic Stay in bankruptcy. Your phone stops ringing, threatening letters stop arriving by mail, and peace is immediately restored to your life.

How Quickly Will I Recover

This is a question which certainly is on everyone’s mind. Bankruptcy clients are often surprised at how quickly they begin to recover from bankruptcy. While the bankruptcy will show on your credit for up to 10 years, you will begin to receive offers for vehicle financing, credit cards, and other extensions of credit, within one year of filing. Most clients report that their credit score one year after filing bankruptcy is better than it was on the day they filed bankruptcy. If you’re wondering “Is bankruptcy right for me?” these are great answers when it comes to credit scores!

Can I Buy A House If I File Bankruptcy

We love that clients think ahead about the dream of homeownership. For most clients considering bankruptcy, there’s no way to buy a house due to the amount of debt they have, and the fact their credit score has usually been lowered by aggressive banks reporting late and non-payments. There’s good news. Two years after you complete your bankruptcy, you’ll become eligible for some federal home lending programs. Four years after you complete your bankruptcy, you’ll become eligible for the same loan products everyone in the private market is eligible for. In the meantime, you’ll be able to save for a down payment because you won’t be sending money to credit card companies every month.

Speak With A Charlotte Bankruptcy Attorney

If you’d like more information about filing bankruptcy, speak with a Charlotte bankruptcy attorney today. You can call us at 704.749.7747 or click here for a FREE CONSULTATION. We know you have choices. We hope you choose to Recover With Us.