When your income is not enough to cover all of your monthly bills consistently, you must explore a few options:
- Get a second job.
- Consolidate debts and make one payment a month to a consolidation firm.
- File bankruptcy.
If you believe bankruptcy is the route you need to take to get out of debt, you can file on your own; however, it is advisable to obtain a bankruptcy attorney. Filing bankruptcy can be complicated, especially if there is property involved. It would be best if you had the expertise of a bankruptcy attorney. This attorney can inform you of your debt options.
Being in debt causes you financial stress and depression and is the one thing that can quickly ruin a relationship, cause family tension, and health problems. Harassing collection calls and calls from bill collectors causes a heavy burden. When all of these problems mount up, and you do not know what you can do to relieve yourself of debt problems, perhaps speaking to a bankruptcy attorney will help put your finances in perspective and put you on the road to financial recovery.
Even though your finances are a mess and you do not have enough money every month to pay bills, you somehow managed to keep a decent FICO score. Your main concern is your credit score and what impact bankruptcy has on your current credit rating.
Mounting bills are overwhelming, and when there is no other way but to file bankruptcy, it may be the fresh start you need with your debts. Your affordable bankruptcy lawyer in Batavia, OH, will look at your situation and assess your options guiding you to the right decision.
Attorneys offer specialized areas expertise, so be sure to secure a seasoned bankruptcy attorney who is budget-sensitive and can help you out of a tough situation. The consultation is free to find out if you qualify for bankruptcy. You will find out if you should file Chapter 7 or Chapter 13 bankruptcy. The specifics of filing can be complicated and confusing, so recommendations are to obtain an attorney.
You should know that filing bankruptcy does not always release some of your debt. You cannot include debt, such as student loans, child support, debts through fraud, or theft. You must complete some mandatory requirements online when filing bankruptcy such as,
- Is bankruptcy the right decision for you?
- Pre-filing credit counseling is mandatory.
- Debt management education is mandatory.
What Happens to Your Credit Score after Bankruptcy
Filing bankruptcy significantly impacts your credit rating. After bankruptcy make sure you pay remaining creditors on time. If you continue to make late payments on bills, accounts sent to collection, and charge offs, this will not raise your FICO score.
Your good credit score is going to spiral downward either way. Bankruptcy has a significant impact on your credit rating. However, you can work to reestablish an excellent score by paying bills on time. Getting your credit score to where you want it will take time and does not happen overnight.
If your credit score is at least 700, a bankruptcy knocks at least 200 points off your credit score. If your score is lower due to late payments and missed payments, you may lose fewer points because your credit rating is already low. Lower credit scores lose up to 150 points after filing bankruptcy.
Bankruptcy is reported to all three credit bureaus and stays on your credit report for seven to ten years. There are varying degrees of how this will affect a credit score depending on your debt. It also depends on how you file bankruptcy because Chapter 7 and Chapter 13 impact credit scores differently.
Chapter 7 Bankruptc
When you file Chapter 7, this type of bankruptcy liquidates all exempt assets, including property. The proceeds you get from this liquidation pay off your debt. Chapter 7 requires a sizeable amount of assets to repay outstanding debt. The chances are high that you do not have enough assets to pay off all debt. The court discharges all other unpaid debt.
A Chapter 7 bankruptcy reports to all three credit reporting agencies and stays on your credit report for up to ten years. Chapter 7, bankruptcy, causes a more significant negative impact on your creditors because you make no further payments.
Chapter 13 Bankruptc
This form of bankruptcy allows you to pay off some debt, such as medical debt, while you partially repay other obligations over the course of three to five years. Chapter 13 allows you to repay your debt, which adds a positive note to your creditors and a better outcome on your credit report.
If you have several accounts with low balances, it is better than having several accounts with higher balances. Low balances tend to have a positive effect on credit scores. Accounts that go unpaid and set in collections fall off your credit report after seven years. Check your credit report at least quarterly to make sure there are no listed debt errors. Notify that credit bureau that there is an error on your credit report. You may have to write a letter of explanation about the error. After seven to ten years, your bankruptcy drops off your credit report and some accounts in collections.
How to Improve Your FICO Score after Bankruptc
The only way you can improve your credit score is by making regular payments to debtors. Raising your credit score does not happen overnight. This increase takes time. Bankruptcy makes it challenging to get loans and credit. You will also pay a higher rate of interest on accounts because you are high financial risk
It is advisable to apply for a secured credit card. Use no more than 30 percent of your fixed credit line and pay off this amount monthly. After a time, you can reapply for a non-secured credit card with lower interest rates. Get in the habit of checking your credit report at least quarterly and be vigilant about the credit you use.