If you are struggling with overwhelming debt and are thinking of filing for bankruptcy, you’re not alone. While the word “bankruptcy” often conjures up images of failed companies, personal bankruptcies are far more common. More than half a million personal bankruptcies were filed last year, a nearly 50% jump from three years earlier, according to the Administrative Office of the U.S. Courts.
Filings at the end of March were up almost 12% from a year earlier.
Experts say this shows that a growing number of Americans have reached the point where the pressure of their debt has surpassed the stigma of bankruptcy.
A common bankruptcy concern is that it can hurt your credit history. But if you’re filing for bankruptcy, your credit score is probably not in the best place.
In fact, many of our clients have seen their credit scores improve after filing for bankruptcy. Here’s what some of them have to say.
All three of my credit reports showed a score of 775. I couldn’t believe my score was that high after 10 years. Working with Tim was the best decision I made for my situation. I have no regrets, and I’m glad to have the past behind me. – Bill T.
Hi Tim, I wanted to send a quick note to thank you and your team for handling my bankruptcy case. Just a month or two after discharge, my credit scores are already in the upper 600s. I’ve included a screenshot in case you would like to use it with prospective clients. – C.S.
While filing for bankruptcy can relieve you from your debts, it is not a step to be taken lightly. Be sure to ask yourself the following questions before filing for bankruptcy.
- Have I exhausted all my options? Thoroughly investigate alternatives or consider selling assets to pay off your debts. Alternatives, such as loan modifications and credit counseling, may provide a way to manage your debt and avoid some of the costs of filing for bankruptcy.
- What type of bankruptcy is most appropriate for my situation? There are different types of bankruptcy. For individuals, the options are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 involves liquidating your assets to pay off debts, while Chapter 13 establishes a repayment plan over a three-to-five-year period. Each has its own eligibility requirements, so understanding which type you qualify for is key.
- How will bankruptcy affect my credit score and for how long? Bankruptcy will have an impact on your credit score, potentially lowering it by 200 points or more. However, if your score is already low, perhaps due to high credit card balances or late payments, it may not drop that many points.
- Can I afford the costs associated with filing for bankruptcy? While it may seem counterintuitive, filing for bankruptcy isn’t free. It is a legal process that comes with costs. There are court filing fees and it is important to hire an experienced bankruptcy attorney to help you navigate the process.
- Will bankruptcy discharge all my debts? Not all debts can be discharged in bankruptcy. For example, federal student loans, most tax debt, alimony and child support payments cannot be discharged in bankruptcy.
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If you have questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can assist you and address all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild, and recover. The day you hire our firm; we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
