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Bankruptcy and Your Credit Report: How Long Will It Stay There?
When you file for bankruptcy under Chapter 7 or Chapter 13 it can stay on your credit report for up to 10 years. Luckily for most of our clients, the bankruptcy being reported on their credit report isn’t too damaging. Most of our clients actually see their score improve, because their debt-to-income ratio instantly improves, and because creditors are required to remove any negative reporting from the credit report. As a result, getting a car, loan, or credit card is typically not difficult.
Additionally, there are actions you can take on top of filing bankruptcy in order to hasten the process of improving your credit score. This post details some strategies to achieve that goal.
Chapter 7
You can discharge most, if not all, of your debts after filing for Chapter 7 bankruptcy. This means that a lender cannot collect a discharged debt, and you’re no longer responsible for repaying it.
Bankruptcy Due to Medical Bills
Medical bills are a very common reason people file for bankruptcy. For those who cannot pay their medical bills and do not file for bankruptcy, their situation likely will worsen.
If you are unable to pay medical bills, you’ll start getting late-payment notifications, and late fees will accrue. The medical provider may sue you in the future and win a monetary judgment against you, or it could also result in wage garnishment, a bank levy, or the placing of a lien against your non-exempt property.
Medical Bankruptcy
If you can’t pay the bill and it appears that the creditor will pursue you for payment, your good credit will suffer since a collection action will appear on your credit report. If they sue you and win the case, the medical provider could garnish your bank account or pursue other collection measures. When it comes to bankruptcy, filing as soon as possible could help you get back on your feet financially faster.
Chapter 7
For those with modest incomes, and assets with little or no equity, Chapter 7 bankruptcy is a great option. There is no requirement for you to have a specific amount of debt. You can apply for Chapter 7 bankruptcy if you owe a single large amount. It is possible to wipe away medical bills and most other unsecured debts in a Chapter 7 bankruptcy.
Can You Keep Your Car When Filing for Bankruptcy?
You may be asking, though, how you can keep your car when filing for bankruptcy.
There are two main types of bankruptcy: Chapter 7, which involves liquidating non-exempt assets (in Texas thankfully very few assets, for most people, are non-exempt), and Chapter 13, which focuses on debt repayment. What will happen to your vehicle if you file for bankruptcy is determined by the type of bankruptcy you declare and the amount of equity you have in your car.
In case you file Chapter 7
Most of your debts are discharged, meaning your legal liability to pay the creditor/ debt has been extinguished in Chapter 7 bankruptcy. In exchange, you must surrender non-exempt property which the bankruptcy trustee will sell and use the funds to pay your unsecured creditors. In Chapter 7, the ability to keep your vehicle is determined by whether or not your equity is classified as exempt and whether or not you are behind on your car payments. (Equity = Balance of Loan – Vehicle Value) An experienced attorney can help you navigate the potential pit falls of filing for bankruptcy with a vehicle that you want to keep or surrender. It is extremely unlikely to have a non-exempt vehicle in a Chapter 7 bankruptcy.
Stopping Foreclosure in Texas With Bankruptcy
If debt has taken over your peace of mind, you may be considering filing for bankruptcy. An experienced attorney can explain your choices and help you find a solution to collection letters and harassing phone calls from creditors. Bankruptcy can alleviate your financial stress and provide a fresh start.
If you’re considering filing for bankruptcy, you’re probably worried about losing your house, car, or other valuables. This is where the experience of Acker Warren, P.C. can help. An experienced lawyer can assess your case and come up with a solution that is beneficial for you and helps you retain your assets.
Filing for Chapter 7 and Chapter 13
When choosing how to stop foreclosure proceedings in Texas, one option is to declare bankruptcy. The automatic stay is in effect immediately upon filing of a Bankruptcy Petition. The Automatic Stay halts all collection actions against a Debtor including foreclosure. Your mortgage creditor is prohibited by the Court from moving forward with foreclosure once the case has been filed.
Answers to Popular Bankruptcy Questions
Over many years of practicing bankruptcy law, we have found that certain questions consistently reoccur. If you are considering filing for bankruptcy, the below questions have likely crossed your mind.
Please remember that this is broad information that may or may not apply to your unique situation. It’s critical to discuss your specific circumstances with an attorney who has the knowledge, expertise, and experience to assess your financial situation.
Below you will find the answers to frequently asked bankruptcy questions. These answers can help you decide whether to proceed with the bankruptcy procedure or look into alternative debt-relief options.
How does bankruptcy work?
The two most common kinds of consumer bankruptcies are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy dismisses almost all types of debts, such as credit card debt, medical bills, and loans. In the unlikely event that a debtor has non-exempt property (vacation homes, boats, excessive jewelry), the bankruptcy trustee may sell those assets and use the profits to pay your creditors. Qualification for Chapter 7 is largely based on income, and there is no required payment to creditors.
Prevent or Avoid Repossession
One of the most common concerns among bankruptcy filers is the potential of losing their property after filing the case. Our clients obviously rely on their vehicles to go to and from work and home. Some people file bankruptcy with their vehicle loans already in default. When it comes to preventing repossession during bankruptcy, what is the best advice?
Our goal is to inform our clients about all aspects of bankruptcy. Having the correct information helps individuals to make educated decisions while avoiding potentially harmful information. There are a lot of misunderstandings about Texas repossession law. Any property encumbered by loans, like automobiles, furniture, and appliances, may be subject to repossession by a creditor if you default on your payments. If you are late or otherwise default on your loan contract, repossession may occur without warning.
If you fall behind on payments on your car or other collateral, the first step is to contact your creditor. The creditor is not required to cooperate with you, even if it’s only a temporary problem. If they do, be careful to have any arrangement in writing, as creditors may still seize your property after accepting partial payment.
Bankruptcy and Student Loans: What You Need to Know
You may have heard that student loans are not dischargeable in bankruptcy. However, this is a construed and oversimplified statement. Under certain circumstances, you can get your student loans discharged, but the threshold is higher, and the process is more complicated than it is for other forms of debt.
To do so, you must demonstrate that paying the debt will cause you and your dependents undue hardship. Courts use different criteria to determine whether a borrower has shown undue hardship. Our District, the 5th Circuit uses the Brunner Test.
The student loan will get canceled if you can successfully prove undue hardship. Declaring bankruptcy also shields you from collection actions on your debts.
Consult with a bankruptcy lawyer to understand how bankruptcy and student loans interact.
Facts about Bankruptcy and Taxes
There is a life after bankruptcy, and it includes taxes. Since bankruptcy and tax laws are both complex, it is critical to know how filing for bankruptcy may impact previous tax debt as well as future commitments to the IRS before you file.
The Bankruptcy Code requires a debtor to file an individual tax return or request an extension, per the IRS Publication 908 Bankruptcy Tax Guide and this return MUST be provided to your case Trustee. The bankruptcy case may convert or dismiss if this does not occur.
Bankruptcy and taxes can make anyone feel uncomfortable, especially during hard times. In this article, Acker Warren P.C. will share some facts about bankruptcy and taxes so you can prepare for what to expect and hopefully reduce some stress.
Arlington Based Firm Acker Warren P.C., Selected to Texas Rising Stars List 2021
The research team at Super Lawyers selects no more than 2.5 percent of the lawyers in the state to obtain this honor every year. The Texas Rising Stars list for 2021 included Arlington Based Law Firm Acker Warren P.C.
Super Lawyers is a Thomson Reuters business that recognizes distinguished lawyers from more than 70 fields of practice that have attained a high rate of peer recognition and professional success. The picks for the Rising Stars list are made by a patented multistage process that includes a statewide lawyer survey, an unbiased polling assessment of candidates, and peer reviews by practice field. As a result, a trustworthy, extensive, and varied list of outstanding attorneys develops.
About 2.5 percent of lawyers in each state are named to the Rising Stars list. To be considered for Rising Stars, an applicant must be under 40 years old and have practiced for a decade or less. Licensed and practicing attorneys are eligible to be nominated by their peers.
I Have Been Sued By a Debt Collector. Now What?
Getting sued by a debt collector can be overwhelming. Financial hardship takes a toll on our minds and can affect our mental health. However, it is essential to know that you’re not alone and have options if you’re facing debt-related problems. To understand what to do when you have been served, you’ll need to learn more about what happens to unpaid debts and how these lawsuits typically proceed.
What Happens When You Don’t Pay Your Debt
When you miss a monthly payment on a loan for the first time, the creditor will most likely contact you or send you a letter via email or postal mail to recover the overdue amount. After several months of missed payments, the initial creditor is likely to cut losses and sell the loan to a collection agency. The debt collector who bought your debt will then start collecting from you. If all collection efforts fail and you proceed to fall behind on your payments, creditors can file a lawsuit against you.
From our office in Arlington, we serve clients throughout Tarrant County, Dallas County, Parker County, Denton County, Wise County, Dallas, Fort Worth, Irving, Grand Prairie, Bedford, Keller, Euless, Richland Hills, North Richland Hills, Mansfield, Coppell, Kennedale, Las Colinas, Burleson, Azle, Saginaw, Haltom City, Watauga, Southlake, Benbrook, Colleyville, Grapevine, Crowley, Aledo, Roanoke, Trophy Club, Carrollton, Farmers Branch, Richardson, and Hurst, as well as other communities across North Texas.
Results listed are not a guarantee or indication of future case results.
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