The Benefits and Disadvantages of Filing for Bankruptcy

Posted on August 22, 2013 by Staff Writer

The choice to file for bankruptcy is not an easy one. The benefits need to outweigh the negative results of bankruptcy. It is necessary to have a full understanding of the consequences of bankruptcy in order to make the best decision possible.

The following are possible outcomes of bankruptcy:

1. Weakened Credit Score

Filing for bankruptcy has a negative effect on your credit score. A bankruptcy shows up on your personal report for 7 to 10 years depending on the type of bankruptcy for which you file. Yet, bankruptcy allows for a financial fresh start. You can rebuild your credit over time and there is an opportunity for it to be better than before your bankruptcy.

2. Difficulty Getting Loans

One of the results of having a bad credit score post-bankruptcy is that it will be more difficult to get a loan. You will also have a difficult time being approved for credit cards and financing the purchase of a home. Yet, if you are considering filing for bankruptcy, it might not be the best idea to have new bills to pay.

3. Issues with Finding Employment

Potential employers occasionally review your credit report before offering you a job. Certain states have outlawed or limited such a practice because of the negative cycle it perpetuates. People who can’t pay their bills on time are not able to get jobs that would allow them to pay their bills on time. Arizona is not one of the states that currently regulates such activity.

The benefits of bankruptcy can far outweigh the negative aspects because it will allow you to start fresh. It is important to discuss your situation with an Arizona bankruptcy lawyer. Bankruptcy will eliminate either some or all of your debts depending on what chapter is selected. Filing will also stop harassment from creditors, foreclosure, wage garnishment, or repossession because filing creates an injunction called an automatic stay. In the long run, a bankruptcy will allow you to build your credit back up to a respectable level and allow you to regain your life. Contact a dedicated bankruptcy attorney in Casa Grande who can assist you in deciding if filing is the right step for you.

Getting a Mortgage after Bankruptcy

Posted on August 7, 2013 by Staff Writer

At one time, going through bankruptcy had a stigma that was hard to shake when trying to move on with your financial life. However, according to SFGate Home Guides, not only is the stigma around bankruptcy lessening, but it is also very possible to get a new home in as little as a couple of years after the discharge of your bankruptcy. Here are a few things that you can do to get there.

Check for Accuracy

Once your bankruptcy has been discharged, check your credit report to ensure that everything that was included in the bankruptcy has been closed and discharged. You want to make sure that you do not have any inaccuracies there to bring down your credit score.

Open New Trade Lines

If you have any debt that was not included in the bankruptcy, such as student loans, make sure that you make timely payments on them. Remember, the point is to show that you are now creditworthy and financially responsible. Now that your bankruptcy is discharged, you will be getting offers for credit cards. Find the one with the lowest interest rate and fees. Once you acquire your new credit card, never use more than 30 percent of your credit line, and pay the balance every month.

Take Out a Larger Loan

About a year after your discharge, take out a larger loan such as a car note. You need to be able to show that you can handle a larger debt. Make sure that you have zero late payments while you are in the process of rebuilding your credit profile. You have to show your creditworthiness.

If you have questions regarding what you can include in your bankruptcy or about the discharge of your bankruptcy, a qualified and experienced Arizona bankruptcy attorney can assist you.

To Reaffirm or Not to Reaffirm, That is the Question!

Posted on June 27, 2013 by Staff Writer

Filing for bankruptcy is a difficult decision that few individuals make lightly. Ultimately, the goal is to emerge from bankruptcy with as little debt as possible while protecting assets that would otherwise be subject to a bankruptcy disposition. The federal bankruptcy laws usually require the help of an experienced attorney. Without an attorney, there is a likelihood that a person who files for bankruptcy will remain liable for certain debts that would be eliminated if the bankruptcy is filed correctly.

Take the concept of reaffirmation, for example, which allows choosing to remain liable for certain debts despite the bankruptcy. See 11U.S.C. § 524(c). Usually, bankruptcy eliminates just about any contract that creates a debt obligation, with some exceptions. If the debt is secured by an asset, e.g. car or home, the entity that holds the debt has the power to repossess the asset, but cannot go after the person for the deficiency. For example, if a home had an outstanding mortgage of $100,000, but the home is only worth $80,000, the bank may repossess the home, but cannot sue mortgage holder for the $20,000, unless they reaffirm, that is. By choosing to reaffirm, a person is effectively reviving an obligation that the bankruptcy eliminated. Obviously, lenders would have everyone reaffirm their debt, but experienced bankruptcy attorneys would seldom advise their clients to do so.

Another benefit of not reaffirming is that one may live in the home as long as they make the monthly mortgage payments, and the title stays with the owner. Banks dislike bankruptcies, but they dislike having to pay for maintaining a vacant home even more.

The bad news – yes, there is bad news – is that credit reports will suffer despite the mortgage payments.

The good news is that an experienced Arizona bankruptcy attorney has the ability to create a bankruptcy plan that fits each client’s needs. Contact us today for assistance with your bankruptcy.

Getting a Mortgage after Bankruptcy

Posted on June 21, 2013 by Staff Writer

While having to file bankruptcy may be a clear setback for some, it really can be utilized to get a fresh start. Part of this fresh start is reestablishing your credit profile so that you are able to move on from your state of bankruptcy.

The first thing that you need to do is to allow yourself enough time before applying for a mortgage loan. Most lenders will require that you wait for at least a year after your bankruptcy is discharged. Even after a year, your interest rates may be high. The longer you can wait the better it will be for you.

During this waiting time, you want to start building new trade lines. Lenders determine your creditworthiness by your payment activity. The longer that you show a positive payment history, the better your chances are for being approved. Being approved for any type of credit can be challenging initially. You may be charged higher interest rates initially. You can start with small lines of credit such as secured credit cards or even an installment loan through your bank.

While you are rebuilding your credit, evaluate your financial situation. You need to figure out how much you can afford to pay monthly. It is important to stay within your means so that you do not end up in another financially binding situation such as the one that led to your initial bankruptcy filing. You will need to show your ability to pay for the new mortgage loan with your financial statements.

This would also be a great time to create a new budget. Cut back on the things that are not completely necessary. If you look at everything that you spend, you will find something that you can do without. Having a good credit profile is important. If you have questions regarding filing bankruptcy or reestablishing your credit after bankruptcy, contact your Arizona bankruptcy attorney today.

Image courtesy of patpitchaya/freedigitalphotos.net

Good Credit after Bankruptcy Is Possible

Posted on June 19, 2013 by Staff Writer

Arizona residents and others may hesitate to file bankruptcy for various reasons. One such reason may be the fear that having a good credit score again seems impossible after bankruptcy. That is simply not true. You can improve your credit score even after you have filed bankruptcy.

Life happens, and bills can get out of control. To restore order, many people turn to bankruptcy. Bankruptcy is a personal choice and one that can provide a person with a fresh start. It will affect your credit but credit is forgiving. Certain actions can help you regain your good score over time.

Keep certain accounts open, such as car and mortgage accounts. Most often, these types of lenders will send you a reaffirmation letter asking for your confirmation to continue your payments. If you can afford to it is beneficial to your credit to do so. By continuing your payments, you are rebuilding your credit, as these lenders will continue to report monthly to the credit bureaus.

Secured credit is still credit and it is a good way to rebuild credit. With as little as $250, you can be well on track to regaining a good credit score. Check with your bank to see if they offer a secured card. The initial deposit is held as collateral. This deposit is usually released after you have proven you can maintain a good payment history.

Build credit by association when you become an authorized user on someone else’s account who has good credit. Some friends and family may not be willing to do this. This will not reflect poorly on his or her score, but it can work to improve your score.

Are you considering bankruptcy? Contact an Arizona bankruptcy attorney to help with any questions that you may have. He or she can help protect your assets and discuss how to get your credit back on track. It is a free consultation.

Image courtesy Steve Miles of freedigitalphotos.net

Do you have a great credit score? Can you keep it?

Posted on January 22, 2013 by Staff Writer

How your credit score looks after bankruptcy depends in large part to what your credit score looked like before you filed for bankruptcy.

For most bankruptcy filers they don’t see their credit score drop much. Why? Because their credit score is already so low it has nowhere to go but up! Almost always, a person filing for bankruptcy has repayment problems such as late payments, missed payments, maxed-out credit cards, charged-off accounts, collection accounts, and judgments. Each of these problems has a devastating impact on credit scores.

Many see a slight boost in their credit score from filing bankruptcy. Why? Because they are no longer responsible for the debts discharged in the bankruptcy. High balances are removed as are any late payments or records of unpaid debts. Instead, accounts will read “included in Bankruptcy.” Therefore, you become a better credit risk after having filed bankruptcy because you no longer have unpaid obligations.

Your credit score alone shouldn’t be the deciding factor in whether you file for bankruptcy. Look at all options before making a decision. So, speak with one of our knowledgeable bankruptcy attorneys to see how bankruptcy will affect your credit score.

Declaring Bankruptcy before or after Marriage?

Posted on January 2, 2013 by Staff Writer

When two people forge a bond and want to get married, there are a lot of things to consider. On one hand, there is the planning that goes into a wedding. Finding a florist, booking a venue, and all the other vendors that must be contacted make a long list. On the other hand, there are issues with where you will live, what your goals are, and other important marriage related concerns. So if you have debts, this is the time to consider filing for bankruptcy.

There are many reasons to file for bankruptcy before marriage. The means test is a very important part of being able to declare for bankruptcy because it measures if you are able to recover from being in a bad financial position by yourself. Having a separate income, being single, you may be more likely to be qualified for a bankruptcy. Once you are married, your income is considered with your spouse, even if your debts are not.

This is because Arizona is a community property state. That means that your new spouse is not accountable for the debts accrued before marriage. Those debts will be in your name regardless of your marital status. It behooves you to consider your future spouse’s credit score and income. If they also have a bad credit score, you might be better off trying to work through your debts so that you can get loans for cars or a house.

Help alleviate the stress associated with these major steps in your life. Don’t put too many things on your plate because going through a bankruptcy is as time-consuming as preparing for a wedding. The best advice is to contact a skilled bankruptcy attorney in Arizona who can help you decide the best step for you before your nuptials.

Credit Card Tips after Bankruptcy

Posted on December 26, 2012 by Staff Writer

A Chapter 7 bankruptcy will stay on a credit report for up to 10 years. A Chapter 13 bankruptcy will stay on a credit report for up to 7 years. Everyone who applies for a credit card, car loan, or mortgage, gets their credit report reviewed. Filing for bankruptcy can make you a poor candidate for bowing money or getting credit, but there are ways to rebuild credit.

While it always seems that credit cards are the reason that people declare bankruptcy, they are one easy way to rebuild credit. There are credit cards which are termed secured, which can be used by those who filed for bankruptcy. It is termed secured because the user secures their debt by paying a security deposit to the credit card company.

Before you apply for this type of credit card, do some research and get some counseling. Make sure that the card reports to all three credit bureaus. This will allow your timely payments to affect you credit scores as much as possible. Once you have a new credit card, keep the balance around 10% to 15%. Another common mistake is closing credit cards. If you close a card, it reduces the amount of credit you have available. If you can’t stop using your cards after the balance is paid, then just cut the card in half.

Bankruptcy can be an important tool to secure your financial future. If you have any question about rebuilding your credit or life after bankruptcy, reach out to a professional. Contact a helpful bankruptcy attorney in Tempe who can guide you back into a new financial future.

How Bankruptcy Affects Your Credit Score

Posted on June 29, 2012 by Staff Writer

In most cases, the filing of a Bankruptcy and the eventual Discharge actually helps improve a persons credit score.

If a person has a negative credit history, unless the negative effects ogf the history are removed, the credit score remains weak.

The filing of a Bankruptcy can remove the past due debts and “clean-up” the old credit history by eliminatng those debts that could not be paid. Once the debts are eliminated through what is called the “Discharge”, then one can start to rebuild their credit. If the past due debts are not eliminated and remain on the credi report then those past due debts continue to result in a weak credit score and it is difficult to rebuild or strenghten the credit score.

If you are having difficulty making your debt payments, consult an attorney. You just might learn that you could improve your credit score much more quickly if you elected to file a Bankruptcy because your “fresh start” will allow you to begin rebuilding a positive credit score.