Tag: Chapter 7

Credit Card Debt

Three Credit Card Mistakes To Avoid

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A credit card can be a useful tool when it comes to improving a consumer’s credit score or financing large purchases. However, when credit card spending gets out of hand, it can be easy for that balance to grow out of control. The following tips can be helpful for consumers using credit cards to pay for daily expenses.

Avoid Maxing Out Credit Cards

Most credit cards come with a maximum spending limit, and while it can be tempting to rely on that figure when making credit card purchases, it is important that consumers avoid reaching that maximum amount. One reason for avoiding this is a maxed-out credit card can reflect negatively on a consumer’s credit score. If a consumer uses more than 30 percent of his or her available credit, his or her credit score will be reduced. This reduction occurs because credit utilization ratios are considered by credit reporting agencies when calculating a person’s credit score. Many credit cards also tack on fees to the person’s balance if he or she goes over the card’s limit.

Credit Card Debt

Should I Contribute to my 401K or Pay Off Credit Card Debt?

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Credit card debt is a burden that many consumers struggle with. Without a large influx of cash, it can be difficult to pay off outstanding credit card bills. Many consumers also struggle with deciding whether they should focus first on paying these debts off or whether they should be taking any extra funds and saving for retirement in a 401(k) or similar plan.  

Paying Off Credit Card Debt

Credit cards come with high interest rates, which can make paying the balance off impossible. The larger the balance gets, the harder it can be to pay down, which is why it can often be a good idea to focus on paying this debt down first. Additionally, paying down the credit card balance to zero will also noticeably improve the consumer’s credit score. A better credit score will eventually benefit him or her for when it comes time to make a big purchase, such as a car or a home. It will also eliminate the monthly payment from the consumer’s budget, allowing him or her the chance to save for the future, including retirement.  

Bankruptcy Law, Consumer Bankruptcy

Will Filing Chapter 7 Bankruptcy Prevent Vehicle Repossession?

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When someone is behind on his or her car payments, a Chapter 7 bankruptcy case may allow him or her to catch up on these missed car payments, saving the vehicle from repossession. The ability to do this depends on how far behind the borrower is on his or her payments and whether the loan is already in default.   

While a Chapter 7 bankruptcy case will not permanently prevent the person’s vehicle from ever being repossessed, it can provide the borrower a chance to catch up on missed payments or negotiate with the lender before the loan goes into default.  

Bankruptcy Law, Consumer Bankruptcy

The Cost of Filing Bankruptcy in 2021

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Filing for bankruptcy comes with its own set of costs. It may seem counterintuitive that a person who is having difficulty paying his or her bills can pay extra costs to receive relief from his or her financial obligations. However, just because someone is not able to pay his or her bills should not prevent them from hiring an attorney to file their bankruptcy case. While “do it yourself” projects may be a good idea around the house, there are reasons to let a professional handle your bankruptcy filing.

Bankruptcy Law

Knowing When to File for Bankruptcy

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Making the decision to file for bankruptcy is never an easy one. Many times, it can be difficult to know when the time is right or when it is better to wait.  

A bankruptcy case allows a consumer to receive a much-needed financial fresh start by discharging his or her outstanding consumer debts. The types of debts that are discharged in a bankruptcy case include credit card debt, mortgages, car loans, medical debt, and other unsecured loans.  

Bankruptcy Law

What is a ‘No Asset’ Chapter 7 Bankruptcy Case?

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In a no-asset Chapter 7 bankruptcy case, the person filing for bankruptcy keeps all of their property because it falls within the exemptions provided under federal law or the law in their state.

With a Chapter 7 liquidation bankruptcy, a filer surrenders their assets to the bankruptcy estate, which uses them to pay off creditors. But in reality, this is only true of non-exempt property. Many of our cases, are in fact, ‘no asset’ cases. Bankruptcy law recognizes that filers need to retain some property so they can survive the process with something on which to build a future after bankruptcy.

Bankruptcy Law, Credit Card Debt, Debt Collection

Important Tips to Know about Credit Card Debt Forgiveness

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Credit card debt plagues so many today. Even with the economic stimulus relief, some consumers are having to utilize credit cards to make ends meet. Escaping the load of credit card debt can seem like an impossible feat. Whenever someone offers a way out or credit card debt forgiveness, it can be easy to jump to accept the offer. The problem is credit card debt forgiveness can be more complicated than simply having the debt forgiven.   

Not All Debt Forgiveness Strategies Are Equal  

Credit card debt is forgiven usually from two strategies, namely debt settlement or bankruptcy. Many consumers try a third strategy, which involves ignoring the amount owed until the statute of limitations has passed for collecting on the debt.  However, the damage that can result to the consumer’s credit score as a result of this failed strategy make it often not worth the wait.  

Bankruptcy Law

How Often Can a Person File for Bankruptcy?

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If you have filed for bankruptcy protection in the past and have found yourself facing financial trouble again, it is possible to file for bankruptcy a second time.  In fact, approximately eight percent of bankruptcy filers end up needing to file again at some point. Ultimately, how often someone can file for bankruptcy protection depends on the type of case he or she filed initially, as well as how much time has passed since that first case.  

One of the more commonly used forms of consumer bankruptcy is the Chapter 7 bankruptcy also known as a “liquidation” bankruptcy. This form of bankruptcy lasts a few months, allowing the filer to work closely with the bankruptcy trustee to sell any nonexempt assets to pay off qualifying debts. At the end of the case, the remainder of the filer’s debts, which are usually credit cards or other unsecured debts, are discharged. A Chapter 13 bankruptcy is another form of consumer bankruptcy, also known as a repayment or reorganization bankruptcy. In a Chapter 13 bankruptcy, the filer works with the bankruptcy trustee on a repayment plan, which lasts anywhere from three to five years, where the person pays off his or her debts, liquidating what is left at the end of the case.  

Bankruptcy Law

What Happens When You File for Bankruptcy? 

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The bankruptcy process is meant to give consumers who are struggling financially a fresh start. However, many consumers hold off due to the fear of filing for bankruptcy, even if it is the best option. Bankruptcy cases have both positive aspects, as well as negative ones, that go along with beginning and successfully finalizing a case. It is important to understand how a bankruptcy case works before moving forward with filing so that the person filing knows what to expect.  

Automatic Stay 

One of the most positive aspects of proceeding with a consumer bankruptcy case is the automatic stay that accompanies the filing. As soon as a Chapter 7 or Chapter 13 bankruptcy case is initiated, an automatic stay of all collection efforts against the filer is issued. What this means is the consumer’s creditors are temporarily blocked from moving forward on collecting any outstanding debt. This stay also stops wage garnishments, foreclosures, or completion of legal collections cases. The purpose of the automatic stay is to give the consumer a chance to work with the bankruptcy trustee on determining how various debts should be handled. A creditor can file a request to continue collection even though an automatic stay has been issued, but they can only continue if the request is granted.  

Bankruptcy Law

The Fear of Bankruptcy is What Keeps Many Consumers from Filing

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The fear of the unknown is a powerful force. Unfortunately, the fear of filing for bankruptcy and the unknown keeps many from proceeding with a bankruptcy case, even when it is the best option.

It is for this reason that only a small portion of American consumers file for bankruptcy annually, even though many of them could benefit from either a Chapter 7 or Chapter 13 bankruptcy filing. While many different reasons exist for this failure to file, a misunderstanding of the process and fear of taking that first step keeps them from moving forward.