What Does Bankruptcy Do To Your Credit Score?

What Does Bankruptcy Do To Your Credit Score?

King and King Bankruptcy Attorneys 12/28/12

Bankruptcy reduces balances due to zero on your credit report.  However bankruptcy does not remove a creditor from your credit report and it does not remove the history of missed payments. If you’re looking to remove a creditor from your credit report you can simply wait for them to drop off or file a valid dispute with the credit bureaus.  The most important effect of bankruptcy on your credit report is that it removes your obligation to repay past debts, and that allows you to start rebuilding your credit.

Your credit score will drop after you file for bankruptcy, however your credit score will usually go back up shortly after the bankruptcy is filed because your debt to credit ratio improves.  You will also start to get offers for credit cards and other loans after you file.  When reestablishing credit make sure that the secured credit card reports to the credit bureaus and to have a plan of action to keep your debt under your control. 

I Don’t Want My Credit Score to Drop, Should I File Bankruptcy?

If you are missing payments, then your credit score is decreasing and won’t stop until something is done about it.  If you have trouble paying your bills each month and have no savings, then one large unexpected expense can put you in serious financial jeopardy.

If you cannot pay down your debt and don’t have any savings, then bankruptcy is an option for getting a new start on your financial life. Call King and King at 404-524-6400 for a free bankruptcy consultation today.

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Are Tax Penalties Dischargeable in Bankruptcy?

Are Tax Penalties Dischargeable in Bankruptcy?

King and King attorneys, 12/19/12

The government wants their tax revenue, and if you've ever been in debt to them you know how far they will go to get it.  Back taxes can be a large burden, especially with interest and penalties.  You can use bankruptcy to take care of debts to the IRS.

In general, outstanding tax debt that is less than 3 years old is not nondischargeable, as are tax debts where the debtor has engaged in some sort of deception such as failure to file returns, attempting to evade taxes, and failing to withhold employee taxes.

Now the IRS has some very detailed documentation on how bankruptcy can discharge tax debt. If you want to have a closer look, the IRS details can be found here.  However the short answer is that you can use a chapter 13 bankruptcy to discharge your tax debt.  If you have non-dischargeable tax debts, then you can use a chapter 13 bankruptcy to payoff your taxes.  A chapter 13 bankruptcy allows you to payoff your taxes over 5 years.

If you’re considering filing bankruptcy and you want to include tax debt, you need an experienced bankruptcy attorney on your side. Call King and King for a free consultation at 404-524-6400 

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Can you qualify for a mortgage after bankruptcy?

Can you qualify for a mortgage after bankruptcy?

King and King Bankruptcy Attorneys, 12/14/12

If you’re considering bankruptcy, Chapter 7 can be a very useful option. Although it is not available to everyone - it depends on several different factors, including income - for those who qualify the discharge of debt can lead to a much more solid financial future. However, most everyone who has considered filing for bankruptcy knows that doing so does have its drawbacks, including appearing on the filer's credit report. And, some people believe that having a bankruptcy on your credit report will keep them from making significant financial transactions, such as buying a car or a home, for years.

In fact, someone who has filed for bankruptcy may be eligible for a mortgage within only a couple of years. Depending on the type of personal bankruptcy option, a filer in a post-bankruptcy financial existence may be able to pursue a government-backed mortgage in as little as 1-2 years, and a conventional mortgage in as little as 2-4 years.

There are many reasons why you may be hesitant about considering personal bankruptcy, and the subsequent lack of mortgage options could be one factor. However, when you have the right information about where you stand financially, and how bankruptcy can offer you a fresh start, you may have an easier decision to make than you thought. For a free consultation with an experienced bankruptcy attorney, call King and King 404-524-6400

Can Chapter 13 Bankruptcy Stop Foreclosure?

Will filing a Chapter 13 bankruptcy stop a foreclosure sale?

December 12, 2012, King and King Bankruptcy

Yes, it’s true.  A Chapter 13 bankruptcy will stop a foreclosure sale.  Chapter 13 bankruptcy helps so many people and families save their home, save their vehicle, get out of tax debt, stop lawsuits and basically get their life back without losing the things that mattered most to them.

To save your house from foreclosure, a Chapter 13 bankruptcy is what you will want to file, not Chapter 7.  In many cases homeowners are first sent a certified letter called a NOTICE OF DEFAULT.  You generally have 30 days to bring your mortgage payments current and if you fail to do so you then receive a NOTICE OF SALE.  This is also called a foreclosure sale date.

Home foreclosure can happen within a surprisingly short period of time. Don’t wait until it is too late to file a Chapter 13 bankruptcy.   Working with your mortgage company on a loan modification process or debt workout plan is a great first option, but also prepare to file a Chapter 13 bankruptcy to stop the foreclosure sale as a backup plan. Meet with a bankruptcy attorney to learn what you need to do to file a Chapter 13 bankruptcy at the last minute.  Initial bankruptcy consultations are provided free of charge and they are totally confidential.

Filing bankruptcy is never a first choice and nobody wants to file bankruptcy if there are other options.  But, there are situations where filing bankruptcy is the very best option.  Chapter 13 bankruptcy works!  And, it works fast.  Call King and King for a free bankruptcy consultation today, 404-524-6400

Can Bankruptcy Eliminate Your Student Loans?

Can Bankruptcy Eliminate Your Student Loans?

While bankruptcy can provide you with a fresh start, current bankruptcy laws state that federally insured student loans are not dischargeable, unless you can prove in court that repaying the loans is an "undue hardship." The legal code does not include a definition of what is an "undue hardship."  In each jurisdiction, Judges apply a test to the debtor's circumstances.

Most jurisdictions use a 3 prong test; it requires a borrower to show 3 things:

(1) that the debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans;

(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and

(3) that the debtor has made good faith efforts to repay the loans.

While on the surface it may seem like you could qualify, subsequent cases show that it is extremely difficult to overcome the test in order to obtain dischargeability as Judges strictly rule on what is considered "good faith efforts" and "whether the state of affairs is likely to persist for a significant portion of the repayment period." Typically, people with income that does not exceed 150 percent of the poverty level are considered "low income individuals." But, don't forget the two other prongs of the test as all 3 must be met.

STUDENT LOANS AND CHAPTER 7

The filing of a Chapter 7 case does trigger protection of the "automatic stay." The lenders are supposed to cease any/all collection efforts until either a relief of stay motion is granted or the debtor's case closes post discharge or is dismissed. The creditors typically wait until the case closes and resume demands for payment. If there is no discharge of student loans, payment must resume.

If you or someone you know is having difficulty paying their student loans, we may be able to help.

Contact King and King today for a free bankruptcy consultation 404-524-6400.

How to Get Credit After Filing for Bankruptcy

How to Get Credit After Filing for Bankruptcy

King and King Bankruptcy Attorneys 11/27/2012

During our bankruptcy consultations, one of the biggest worries our clients have is that they’ll never get credit again—or at least not for the 10 years during which bankruptcy shows on their credit report. Our clients are usually surprised to hear it won’t be as difficult as they fear. Bankruptcy will affect your credit score in the beginning, but you will be able to get credit again and rebuild your score. Bankruptcy actually helps your chances of getting credit if you had high credit card debt before the bankruptcy and collections or charge-offs. Bankruptcy gives you a clean slate. 

Secured credit cards:

 A credit union or a bank may give you a secured credit card. This is where you give the bank funds to “secure” the credit on the card. Some lenders might want you to deposit the full amount of the credit limit (e.g., a $500 deposit in exchange for a card with a $500 limit), whereas others might only require you to secure a certain percentage of the limit with a deposit (e.g., a $250 deposit in exchange for a card with a $500 limit).

Credit cards:

Many people get offers for credit cards right after bankruptcy. There are a number of companies that specialize in credit cards after bankruptcy because they can get higher interest rates or fees. Make sure you understand the terms of these offers and take the best one. 

Car loans:

Much like credit cards, there are auto lenders out there who will give you a car loan right after bankruptcy, usually at a higher interest rate. Another option is to get a co-signer for the loan. The lender may agree to refinance it later if you make regular on-time payments for a period of time.

After about six to twelve months of on-time payments toward new accounts, even small ones, your credit will start to improve. From there, getting more credit should get even easier. Some people who work diligently toward rebuilding credit can even buy a house within just a few years after bankruptcy. 

If you have questions about your credit after a bankruptcy, contact King and King at 404-524-6400 for a free consultation. 

Medical Debt and Chapter 7 Bankruptcy

Medical Debt and Chapter 7 Bankruptcy              

King and King bankruptcy attorneys, Saturday, 24 November 2012

Serious illness can happen to anyone at any time. In addition to medical bills, prolonged illness or injury can interfere with your ability to work. Missed work equates to less income, which additionally complicates the financial battle.

Medical problems and the debt that results from them are an extremely common cause for filing Chapter 7. 

Fortunately, there are ways to deal with medical debt. If you are overwhelmed with expenses, Chapter 7 bankruptcy is one possible road to security. Chapter 7 bankruptcy is a form of personal bankruptcy, which clears out unsecured debts. The process generally moves fairly quickly. The average case takes as little as four months from the time of filing.

Bankruptcy courts classify medical debt as unsecured debt, which means that it may be discharged within the bankruptcy process. An unsecured debt is one that is not protected by a physical item of property as collateral. If you are unable make payments on unsecured debts, creditors cannot generally recover any items. However, they may be able to sue you and garnish your wages.

Within the Chapter 7 process, all eligible debts included in the filing should be discharged -- any legal obligation to repay is extinguished.

If you are overwhelmed by serious medical debt, contact King and King today. Our bankruptcy attorneys can help you sort through your finances and construct a solid debt-reducing plan. Call us at 404-524-6400.