How To Pay Off Credit Card Debt And Avoid Bankruptcy
There are a few different options you can consider as you work to pay off a high credit card balance:
As with bankruptcy, it’s important to consider each option carefully and determine if it’s the best path for you. Regardless of which option you choose, though, avoiding bankruptcy can make a huge difference for your future.
Bankruptcy Information Can Be Wrong
You may want to hire a credit repair attorney if your record shows inaccurate financial or bankruptcy information. They can speak with credit reporting agencies, credit card companies, or credit card issuers if you are having personal finance trouble. An attorney can also step in if a company does not discharge your debt correctly or you fall into a credit counseling scam.
Remember: A bankruptcy discharge legally stops creditors from harassing you. You have rights if a company is not following the process or respecting your bankruptcy filing.
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Researching Debt Settlement Companies
Before you enroll in a debt settlement program, do your homework. Youre making a big decision that involves spending a lot of your money money that could go toward paying down your debt. Check out the company with your state Attorney General and local consumer protection agency. They can tell you if any consumer complaints are on file about the firm youre considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.
Enter the name of the company name with the word “complaints” into a search engine. Read what others have said about the companies youre considering, including news about any lawsuits with state or federal regulators for engaging in deceptive or unfair practices.
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Receiving Another Bankruptcy Discharge
Youll qualify for another discharge if you meet the waiting period rules. Heres how it works.
Chapter 7 to Chapter 7. If you received a Chapter 7 discharge previously, eight years must elapse between the old and new filing dates.
Chapter 13 to Chapter 13. Two years must elapse between the two filing dates to receive a discharge in Chapter 13. Because a Chapter 13 repayment plan usually takes three to five years to complete, youll likely be eligible for a second discharge after finishing the first case.
Chapter 7 to Chapter 13. Four years must elapse between the Chapter 7 and Chapter 13 filing dates. Chapter 13 has its benefits even if you dont receive a discharge, however. For instance, you can pay off priority debts, such as newly-incurred taxes or domestic support arrearages. Or, you can catch up on missed mortgage or vehicle loan payments and keep a house or car. Filing for Chapter 13 immediately after receiving a Chapter 7 discharge is commonly referred to as a Chapter 20 bankruptcy.
Chapter 13 to Chapter 7. If you received a Chapter 13 discharge and youd like to receive a Chapter 7 discharge, youll have to wait six years between filing dates. But there is an exception to this rule. The six-year rule wont apply if, in the previous Chapter 13, you paid back:
- all of your unsecured debts, or
- at least 70% of your unsecured debts in a plan proposed in good faith and implemented through your best efforts.
Keep Paying Credit Cards If Bankruptcy Isn’t Needed
When contemplating bankruptcy, the first thing to consider is whether you can afford to pay off your credit cards. Why? Because if you make enough money to do so, you probably won’t qualify for Chapter 7 bankruptcy. The court requires filers with significant disposable income to pay some or all of your credit card debt through a Chapter 13 repayment plan. Plus, a bankruptcy filing will remain on your credit report for seven to ten years. So it’s best to consider all available options first.
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Complaints Seeking Revocation Of Discharge Will Require Retaining Counsel
Keep in mind that the mere filing of an adversary proceeding ;seeking to revoke the discharge will require hiring an attorney to answer the allegations of improper conduct. If these allegations are not addressed in a timely fashion, the debtor will lose their discharge by default.
The possibility that a bankruptcy discharge can be revoked highlights the importance of;full disclosure to your bankruptcy attorney. You must inform your bankruptcy attorney of;all assets and debts in order to ensure that your discharge is not subsequently challenged.
See also:
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Could Anything Prevent Me From Being Discharged
It is possible that your discharge could be opposed by a creditor, an LIT or the Superintendent of Bankruptcy. Generally, a bankruptcy discharge is opposed when the debtor has not fulfilled the requirements of the bankruptcy process. This might be due to:
- Not making the required monthly payments
- Failing to attend two mandatory credit counselling sessions
- Committing an offence related to the bankruptcy claim
There are a few other reasons why a bankruptcy claim could be opposed. For instance, if the bankruptcy was caused by gambling or if a creditor suspects fraudulent activity, it could be opposed by the creditor.
If the bankruptcy discharge was opposed, the debtor would have to attend a court hearing to determine the conditions they would need to fulfil in order to be discharged from bankruptcy.
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Should You File Bankruptcy
The next question that needs to be answered is does it make sense to file bankruptcy or a consumer proposal in order to stop the lawsuit?; This may be much more complicated.
If you are like most people that are sued for an unpaid bill, you probably have more than just this one bill that you have fallen behind on.; Depending on the total amount that you owe and your personal situation filing for bankruptcy may make sense. Alternatively, a ; they are certainly worth consideration.
If the debt you are being sued for is your only debt then the decision to file bankruptcy may be more difficult.; It is possible for a creditor to make your bankruptcy much more complicated, lengthy and therefore expensive.; When there is only one creditor involved this is much more likely.
If you are being threatened with a lawsuit for an unpaid debt then it makes sense for you to contact a bankruptcy trustee to review your situation and options.; A trustee is not a lawyer so they cant assist you with the lawsuit, but they can explain the process in greater detail and help you understand how bankruptcy might help you deal with the problem.
The 3 Best Credit Cards After Bankruptcy And What To Know Before Applying
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One of the many side effects of bankruptcy is the impact it makes on your ability to qualify for a credit card. Getting a credit card after bankruptcy isn’t impossible, but it may be difficult due to the long-term damage bankruptcy does to your credit score. This can be frustrating for bankruptcy filers, since responsibly utilizing a credit card is one of the ways you can repair your credit. Fortunately, there are still options for people who are recovering from bankruptcy, such as becoming an authorized user on another person’s account or opening a secured credit card in your own name.
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Rewards Credit Cards Create More Debt
Post-bankruptcy debtors who sign up for credit cards which offer rewards such as cash back, may be at a higher risk for accumulating large amounts of debt. In a recent study which analyzed the spending habits of 12,000 credit card consumers, it was found that debtors who have rewards credit cards are likely to spend more and accrue more debt.
The initiation of a 1% cash rewards program yielded, on average, a $25 reward each month-and an increase in spending by $68 a month and in credit-card debt of $115 a month, the economists say in a paper to be presented at the American Economic Association meetings next week. ..In many cases, rewards entice people whose cards were dormant to start spending, the study found. About 11% of those who hadnt use their credit cards in the previous three months made purchases of at least $50 in the first month of the program.
Debt Settlement Has Risks
Although a debt settlement company may be able to settle one or more of your debts, consider the risks associated with these programs before you sign up:
1. These programs often require that you deposit money in a special savings account for 36 months or more before all your debts will be settled. Many people have trouble making these payments long enough to get all of their debts settled. They drop out the programs as a result. Before you sign up for a debt settlement program, review your budget carefully to make sure you are financially capable of setting aside the required monthly amounts for the full length of the program.
2. Your creditors have no obligation to agree to negotiate a settlement of the amount you owe. So there is a chance that your debt settlement company will not be able to settle some of your debts even if you set aside the monthly amounts the program requires. Debt settlement companies also often try to negotiate smaller debts first, leaving interest and fees on large debts to grow.
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Here Is What You Should Know When File For Bankruptcy Twice
When you File for Bankruptcy for the first time and receive a discharge, then you have to wait for a specified period before you can receive a discharge again.
If your case was dismissed without entry of a discharge, you can file another bankruptcy but there may be limitations placed on the filing, especially if your case was dismissed within the year preceding your second filing.
For example, if you have had a case dismissed within the last year, the automatic stay only remains in effect in your second filing for one month, unless you get this extended by Order of the Court.
If you have had two cases dismissed within the year preceding a third filing, the automatic stay does not go into effect at all at the beginning of the case, and you have to seek approval from the Court to impose the automatic stay, or in other words put it into effect.
This is important because the automatic stay prevents creditors from taking action against you such as a garnishment, foreclosure or repossession. Normally this stay goes into effect automatically when a bankruptcy is filed, hence the name.
However, if the automatic stay does not go into effect or expires because of a prior bankruptcy dismissal, your bankruptcy will not prevent such creditor action.
With respect to discharge eligibility, you can file for Bankruptcy twice or even three times and get a discharge every time, provided you remain patient and wait for a certain period before filing again.
How Soon Will My Credit Score Improve After Bankruptcy
By FindLaw Staff | Reviewed by Bridget Molitor, JD | Last updated June 30, 2021
You can typically work to improve your credit score over 12-18 months after bankruptcy. Most people will see some improvement after one year if they take the right steps. You can’t remove bankruptcy from your credit report unless it is there in error.
Over this 12-18 month timeframe, your FICO credit report can go from bad credit back to the fair range if you work to rebuild your credit. Achieving a good , very good , or excellent credit score will take much longer.
Many people are afraid of what bankruptcy will do to their credit score. Bankruptcy does hurt credit scores for a time, but so does accumulating debt. In fact, for many, bankruptcy is the only way they can become debt free and allow their credit score to improve. If you are ready to file for bankruptcy, contact a lawyer near you.
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What Can Prevent Your Discharge
A creditor, the Superintendent of Bankruptcy, or your trustee can object to your discharge if you have not completed your required duties, your creditor questions your transactions before bankruptcy, or you committed an offence under the Act.
If your discharge is opposed, a court hearing in bankruptcy court will be held, and a bankruptcy judge or registrar will determine the conditions of your discharge. Those conditions may include a longer bankruptcy period, or you may be required to make additional payments.
The outcome of a court hearing could be an:
- Automatic discharge
How To Build Credit After Bankruptcy
You can start rebuilding your credit score after the bankruptcy stay stops creditors from taking action. Bankruptcy will show on your record for 7-10 years, but every year you work to improve your credit, the less it will affect you and the financing you seek.
You need to wait 30 days after you receive the final discharge. This means most of your accounts will be at a zero balance, and creditors must stop calling you about debts.
To rebuild your credit score, you should:
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What Happens To My Debts
If you enter bankruptcy, you will find that most debts are covered. This means that you no longer have to repay them. In some cases, your trustee may sell your assets or use compulsory payments to help pay your debts.
Read on to understand which debts bankruptcy covers and if you still need to pay certain types of debts.
How The Creditor Can Challenge Dischargeability
If a credit card company wants to argue that a debt is nondischargeable, it must file a complaint with the bankruptcy court. Unless it files such a complaint, even claims for luxury goods and cash advances are discharged along with other obligations against you.
In Chapter 7 bankruptcy, the deadline for filing complaints challenging the dischargeability of a credit card debt is 60 days after the first meeting of creditors.
If a creditor files a nondischargeability complaint, you must file a timely answer if you want to dispute the creditor’s claim. If you file an answer, the bankruptcy court will hold a hearing before deciding whether or not your debt is dischargeable.
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Chapter 7 Bankruptcy: What It Is And How To File
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Chapter 7 bankruptcy can wipe out many forms of overwhelming debt;under the protection of a federal court. You may have to give up some assets, like an expensive car or jewelry, but the vast majority of filers do not. Chapter 7 bankruptcy is the fastest and most common form of bankruptcy.
Chapter 7 bankruptcy erases most unsecured debts, that is, debts without collateral, like medical bills, credit card debt and personal loans. However, some forms of debt, such as back taxes, court judgments, alimony and child support, and student loans generally arent eligible. Chapter 7 bankruptcy will leave a serious mark on your credit reports for 10 years. During this time youll likely find it harder to get credit. Even so, youll probably see your credit scores start to recover in the months after you file.
Read on to learn about how you can qualify for Chapter 7 bankruptcy, how to file, whether this debt relief option is right for you, and how to rebuild after bankruptcy.
What Happens To Your Debts In Bankruptcy
The main reason people file for bankruptcy is to get rid of, or get control of, their debts. How debts are treated in bankruptcy depends on whether you file for Chapter 7 or Chapter 13. ;
Although most debts will be discharged in Chapter 7 bankruptcy, not all are. And in Chapter 13 bankruptcy, you must pay some debts in full through your repayment plan. Others are paid in part, and the remainder discharged at the end of your case.
Below you’ll find articles explaining how your debts are treated in Chapter 7 and Chapter 13 bankruptcy as well as information about what happens to particular debts — such as credit card debt, medical debt, mortgages, car loans, taxes, child support, and student loans.
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