chapter 13 bankruptcy and your credit score

Will a Bankruptcy Filing Ruin My Credit? Exploring the Impact

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Bankruptcy Information You Need to Know

When facing overwhelming financial difficulties, the prospect of filing for bankruptcy can be both daunting and confusing. One of the primary concerns individuals have when considering bankruptcy is how it will impact their credit score and financial future. In this blog post, we will delve into the intricate relationship between bankruptcy filings and credit scores, exploring whether a bankruptcy filing will truly ruin your credit.

Understanding Bankruptcy

Bankruptcy is a legal process designed to help individuals and businesses manage unmanageable debt. It provides a fresh start by either discharging debts (Chapter 7) or establishing a manageable repayment plan (Chapter 13). While bankruptcy offers relief from unmanageable debt, it does come with certain consequences, and its impact on credit is one of the most significant concerns.

The Initial Impact

There’s no denying that a bankruptcy filing will have a negative impact on your credit score. The extent of the impact depends on your credit history and the type of bankruptcy you file for. A Chapter 7 bankruptcy, also known as liquidation bankruptcy, stays on your credit report for 10 years from the filing date. A Chapter 13 bankruptcy, which involves a repayment plan, remains on your credit report for 7 years from the filing date.

Credit Score Drop

The extent of the credit score drop varies from person to person. If your credit was excellent prior to filing, you might experience a more significant drop than someone whose credit was already poor due to missed payments and high debt levels. On average, a bankruptcy filing might lead to an initial credit score decrease of around 100 to 200 points. However, credit scores tend to fluctuate based on a variety of factors, and the drop following a bankruptcy case need not be permanent.

Rebuilding Credit

While a bankruptcy filing does have an initial negative impact, it’s not the end of the road for your credit. The impact diminishes over time, and with responsible financial management, you can start rebuilding your credit sooner than you might think.

Here are some steps to help you rebuild your credit after bankruptcy:

  • Secured Credit Cards: These cards require a deposit and can be a great way to start rebuilding credit. Make small purchases and pay them off in full each month.
  • Timely Payments: Pay all bills, including rent, utilities, and any new credit you obtain, on time. Consistent, on-time payments show responsible behavior.
  • Credit-Builder Loans: Some financial institutions offer loans designed to help you build credit. These loans hold the borrowed amount in an account while you make payments, demonstrating your ability to repay.
  • Budgeting: Develop a budget that ensures you can meet your financial obligations. This will help prevent new debt and late payments.
  • Monitor Your Credit Report: Regularly check your credit report for errors or inaccuracies. Dispute any discrepancies promptly.

Conclusion

While a bankruptcy filing does have a negative impact on your credit, it’s not a life sentence for poor credit. With time, responsible financial practices, and patience, you can gradually rebuild your credit score. The important thing is to use the bankruptcy as a fresh start to develop better money management habits and work towards a healthier financial future. If you’re considering bankruptcy, it’s recommended to consult with a financial advisor or bankruptcy attorney to fully understand the implications and options available to you.

What Do I Get to Keep if I File Bankruptcy?

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Keep Your Car and Other Assets After Filing a Bankruptcy Case

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]”In most cases, debtors with  experienced bankruptcy counsel find that they are able to keep all of the assets that they want to retain.”[/perfectpullquote]Want to keep your car after filing bankruptcy? You’re not alone, one of the first questions that people considering filing a bankruptcy case ask is, “if I file bankruptcy, can I still keep my car?” The answer to that question may depend upon a number of factors, but most debtors are pleased to find that they can keep their automobile after filing a voluntary bankruptcy petition. In this post, we will focus on the basic principles that commonly govern whether a debtor is able to retain an asset after filing a bankruptcy case.

Lien Rights of Creditors Bankruptcy Cases

Many of the consumer debtors that we have represented have owned assets subject to a loan.  Most of our clients have purchased their vehicles under a vehicle retail installment contract (in plain terms, a car loan). If your car loan is current when you file your bankruptcy case, you can continue to make your car payment and keep your car.

If you are behind on your car payments, you may still be able to keep your car by catching up on your missed payments over time in a case under chapter 13. In fact, some borrowers who are behind on their car payments when their cases are filed, keep their cars by catching up on the payments directly after their cases are filed, without chapter 13 repayment plans. Every case is different, and clients should discuss the most prudent course of action in their particular cases with a highly experienced and knowledgeable bankruptcy attorney.

Keeping your car through bankruptcy

You may be able to file bankruptcy and still keep your car. Make the most of your fresh start!

Other secured loans (that is, loans used to purchase assets where the lender retains the right of repossession) are treated similarly to automobile loans. For many reasons, loans secured by mortgages are governed by other rules. However, the basic framework remains the same and, if you continue to pay for your mortgage on time, your lender usually cannot foreclose upon your mortgage.

Reaffirmation of Debts

Reaffirmation Agreement

Discuss reaffirmation of debts with your bankruptcy lawyer.

Your vehicle lender or other secured creditor may request that you sign a reaffirmation agreement. A reaffirmation agreement is an agreement between a lender and its borrower that the pre-bankruptcy rights of both parties will continue in force even after the borrower’s debts are discharged. You may be able to keep your car without reaffirming the loan. Reaffirming a debt may have serious consequences, and debtors should discuss their particular situations with their bankruptcy attorneys before deciding whether a reaffirmation agreement is in their best interests.

The Interplay Between Equity and Exemptions

Debtors who owe much less on their vehicles than they are worth may face another challenge.  An unencumbered asset (that is, one that isn’t subject to a lender’s lien) in a case under chapter 7 of the Bankruptcy Code, may attract the attention of a chapter 7 trustee who may wish to sell the asset and distribute the proceeds to unsecured creditors. Similarly, in a chapter 13 case, parties in interest may object to the confirmation of a chapter 13 plan if the “liquidation alternative test” is not met. The liquidation alternative test requires debtors to pay their unsecured creditors at least as much as they would receive in a hypothetical case under chapter 7. In some chapter 13 cases, unencumbered assets may require debtors to increase their chapter 13 plan payments to provide a greater distribution to the holders of unsecured claims.

Exemptions are the first line of defense that debtors have against losing their unencumbered assets. The Bankruptcy Code enumerates certain exemptions that allow some debtors to retain their vehicles and homes. However, state law determines whether debtors residing in that state may use the federal exemptions contained within the Bankruptcy Code, or another exemption scheme provided under that state’s law. Pennsylvania residents are fortunate in that they may choose between the federal and Pennsylvania state exemption schemes. Selecting the most advantageous set of exemptions and wisely applying available exemptions should be something that you discuss with your bankruptcy attorney before your case is filed. In most cases, debtors with experienced bankruptcy counsel find that they are able to keep all of the assets that they want to retain.[perfectpullquote align=”left” cite=”” link=”” color=”” class=”” size=””]You may be able to continue to make your car payment and retain your vehicle after bankruptcy[/perfectpullquote]

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If you have bankruptcy related questions, you may wish to discuss them with an experienced bankruptcy attorney. Our law firm offers free initial consultations.

(412) 925-8194

 

 

We are a debt relief agency.  We help people file for bankruptcy relief under the United States Bankruptcy Code.

© 2018 Robleto Law, PLLC
Pittsburgh Bankruptcy Lawyers

Bankruptcy Pittsburgh | Find the Best Bankruptcy Lawyer for Your Case

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Discharge in Bankruptcy Shown by Piggy Bank

Bankruptcy Discharge Piggy Bank Pittsburgh

Bankruptcy Pittsburgh. Engaging the Best Bankruptcy Lawyer for your Case May Be More Important than you Know.

In Pittsburgh, as in many other fine cities throughout the United States, businesses and consumers in financial turmoil must find the best bankruptcy lawyer to meet their unique circumstances.  Many will begin their search with the cost of a lawyer central in their minds.  In Pittsburgh, bankruptcy matters generally proceed as they do in other major cities; those with the best bankruptcy lawyers generally realize the most favorable outcomes. For that reason, those who seek out a cheap bankruptcy lawyer or the cheapest bankruptcy in Pittsburgh find they may have paid what they wanted but overpaid for what they received.

Those considering filing bankruptcy in Pittsburgh should consider the cost of Pittsburgh bankruptcy lawyers.  Generally, by the time debtors meet with their bankruptcy lawyers, they’ve become accustomed to tightening their belts.  However, engaging the cheapest bankruptcy lawyer may quickly prove to be false economy.  In truth, finding the best bankruptcy lawyer for a Pittsburgh bankruptcy must a full examination of the value of that bankruptcy attorney.  Of course, debtor must ask how much does it cost to file bankruptcy in Pittsburgh?  But, when considering the cost of filing bankruptcy in Pittsburgh, debtors must really take into account the complexity of their cases, the extent to which adverse parties may be involved in their bankruptcy cases and what other complications may arise over the course of each bankruptcy case.

FREE CONSULTATION – 412-925-8194

A chapter 11 bankruptcy case in Pittsburgh demands the watchful eye of an experienced Pittsburgh bankruptcy lawyer. When your business is on the line, along with the livelihood of its owners and employees, focusing on the cheapest bankruptcy lawyer in Pittsburgh is a clear error. For business reorganizations in Pittsburgh bankruptcy courts, realistic officers will hire competent business bankruptcy lawyers. When your business is on the line in bankruptcy, Pittsburgh bankruptcy lawyer selection could be the most important choice you may have to make.

Chapter 13 debtors face similar issues as do business bankruptcy debtor but on a different scale.  In a chapter 13 bankruptcy, Pittsburgh consumers often need to save their homes, vehicles and other assets that may be critical to the very survival of their families. As with chapter 11 bankruptcy, Pittsburgh needs bright, motivated lawyers to champion the cause of its consumer debtors who need to reorganize their financial burdens.

In chapter 7 bankruptcy Pittsburgh falls in line with other jurisdictions. In chapter 7 bankruptcy, individual debtors in Pittsburgh generally seek a clear pathway to discharge and a fresh start. It is important that in chapter 7 bankruptcy Pittsburgh debtors select a bankruptcy lawyer who will understand their particular circumstances and give them advice that will permit a Pittsburgh bankruptcy judge to award discharge.

In contrast to any other chapter 7 bankruptcy, Pittsburgh business chapter 7 cases demand the close attention of experienced, intelligent, creative and cautious bankruptcy Pittsburgh lawyers. Commercial chapter 7 cases are very different from the ordinary chapter 7 bankruptcy cases. A debtor must always have a good reason to file a bankruptcy in Pittsburgh that is never more pronounced than when it comes to commercial chapter 7 cases. Business debtors wind up their affairs and do not receive a discharge. On the other hand, certain other interested parties do receive the attention of a chapter 7 trustee, the United States trustee and the United States Bankruptcy Judge presiding over their case. There are occasionally (but not often) valid reasons to file a chapter 7 bankruptcy case for an entity that will not continue as a going concern.

At each level and for each chapter of the United States Bankruptcy Code, finding the best bankruptcy lawyer for a bankruptcy Pittsburgh may be the most important Pittsburgh bankruptcy decision a debtor could make. Contact us today for a free initial consultation. Learn how bankruptcy Pittsburgh can help you move forward with debt relief, a fresh start and a clean bankruptcy Pittsburgh.

Call for Your Free Consultation with a Pittsburgh Bankruptcy Lawyer to Discuss Whether Your Debts May be Discharged in Bankruptcy.

FREE CONSULTATION – 412-925-8194

We are a Debt Relief Agency. We Help People File for Relief under the United States Bankruptcy Code.

(c) 2017 Robleto Law, PLLC- Bankruptcy Lawyers in Pittsburgh.

Taking the Mystery and Mean Away From the Bankruptcy Means Test

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Means Test and Chapter 7 Bankruptcy

It Has Never Been Easier to Determine Whether You Qualify for Relief Under Chapter 7 of the United States Bankruptcy Code in Pittsburgh.

Means TestIn 2005, Congress put in place very substantial changes to the United States Bankruptcy Code through an amendment known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).  The BAPCPA amendments set new requirements for eligibility to be a debtor under chapter 7 of the Bankruptcy Code and to receive a discharge under chapter 7.  Importantly, debtors must now undergo a means test if their income exceeds the then-applicable median income for consumers of debtors’ household size in the state in which they reside.

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Eligibility for Chapter 7 Bankruptcy – Median Income Analysis

Debtors whose income does not exceed the relevant median income need not undergo further means testing.  Median incomes information is calculated and published by the United States Census Bureau and median income data is adjusted periodically.  The Office of the United States Trustee publishes median income information on its website.  As of the date of this entry, the median income applicable to debtors in the Commonwealth of Pennsylvania with a household size of one is $50,501.  A household of two in Pennsylvania can earn up to $60,508 without further means test analysis.  A three-person family in Pennsylvania has a median income of $74,083.  With four people the Pennsylvania median income is $89,690 and increases by $8,400 for each additional member of the household.
Median Household Income in the United States: 2015

[Source: U.S. Census Bureau]

The Bankruptcy Means Test Exception Applicable to People with Primarily Business Debts

Individuals whose debts are primarily business debts are excused from the means testing analysis.  The means test analysis under section 707(b) of the Bankruptcy Code applies to individual debtors whose debts are primarily consumer debts.  A Pittsburgh bankruptcy lawyer will be able to help you make the determination of whether your debts are primarily consumer debts or whether you may be exempt from further means testing because of the primary nature of your indebtedness.

The Chapter 7 Means Test and the Presumption of Abuse

The chapter 7 bankruptcy means test is codified in section 707 of the Bankruptcy Code and individual chapter 7 bankruptcy debtors in Pittsburgh and throughout the United States must submit an Official Form 122A-1, Chapter 7 Statement of Your Current Monthly Income.  Debtors must disclose information relevant to their income and household size to determine whether they need to complete the means test.  The means test itself is incorporated into Official Form 122A-2, Chapter 7 Means Test Calculation.  Debtors must draw income data for the means test from the income during the six-month period preceding the filing of their bankruptcy cases.  The Bankruptcy Code permits debtors to subtract from their household any portion of the income of a non-filing spouse that is not dedicated to the payment of household expenses or expenses of debtors’ dependents.  The means test also provides that certain expenses be deducted from a debtor’s adjusted current monthly income to determine monthly disposable income.  That monthly disposable income is then multiplied by 60 to determine a debtor’s five-year disposable income.  If a debtor’s disposable income over five years is less than a certain threshold value (currently $7,700), then the presumption of abuse does not arise.  If the five-year income exceeds the threshold value and a cap value (currently $12,850), then the presumption of abuse arises but the debtor may still elect to complete a statement of special circumstances that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.  A showing of special circumstances may justify continued eligibility for relief under chapter 7.  If a debtor’s five-year disposable income is between the threshold and cap values, the presumption of abuse will not arise unless the five-year disposable income is at least 25% of the debtor’s total nonpriority unsecured debt.

Close Call on the Means Test?  Discuss it with a Pittsburgh Bankruptcy Lawyer!

The increase in the administrative cost and duration of a chapter 13 bankruptcy case from a chapter 7 bankruptcy case is considerable.  In many cases a chapter 13 bankruptcy may be warranted but for other individuals a fresh start under chapter 7 of the Bankruptcy Code will offer the optimal path away from financial distress.  A free consultation with a Pittsburgh bankruptcy attorney could help you understand all of your bankruptcy nonbankruptcy options before making any decision.

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The Chapter 7 Bankruptcy Process

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If your financial situation is dour and you do not expect it to improve, you may want to consider a Chapter 7 bankruptcy. You’ll know you are experiencing difficulties when you begin to miss credit card, car note, house note and other payments. You also may begin to experience significant harassment by these creditors aimed at forcing you to pay. They may call you at all hours, inundate your mailbox with dunning notices and generally make your life miserable. Eventually, some might turn your debts over to collection agencies that may employ the same tactics only with more intensity.

A Chapter 7 bankruptcy is often referred to as “liquidation” and is a common form of “consumer” bankruptcy. It can generally wipe out the following types of balances:

*Credit card balances
*Utility bills
*Judgments obtained by unsecured creditors
*Debt from lines of credit
*Billings and invoices from healthcare organizations
*Personal unsecured loans
*Deficiency judgments (balance owed after a home foreclosure or car repossession)

You can file bankruptcy without a lawyer but the bankruptcy process is complex and will require you to understand and complete financial schedules and statements. In fact, a typical complete bankruptcy petition will run up to 50 pages. Also, Bankruptcy Code contains strict deadlines within which you must complete certain filings and tasks.

The Means Test

Usually, the first step is to consult with a bankruptcy attorney. Your attorney will explain the Means Test. The first part of this test is a comparison of your last six month’s income to the median income for your state. In Pennsylvania, currently it is $44,688 (single), $53,011 (two-person family),
$67,262 (three-person family) and $78,780 (four-person family).

If your income was less than that over the prior six month period, you will qualify for Chapter 7. If your income exceeds those levels, whether you qualify for relief under Chapter 7 will depend upon other factors.

Gathering Creditor Information

Once the means test is settled the bankruptcy attorney will gather your creditor information from your credit report and add them to your bankruptcy schedules so that they (your creditors) will receive a notice of your bankruptcy filing. By law, nearly all kinds of adverse creditor actions are immediately stayed.

The attorney will also record the amount you owe to each creditor. You will be asked to check your petition, schedules and related documents for accuracy and completeness.

Certain kinds of debt are not dischargeable. Tax obligations for which you have not filed a tax return and recently incurred taxes are usually not eligible for discharge in a Chapter 7 bankruptcy. Also, unless your federally guaranteed student loans impose an undue hardship, you will remain responsible for them after your bankruptcy case is closed.

After you are certain that all of the eligible debts are listed and your bankruptcy petition is complete and accurate, the attorney will file your bankruptcy case.

Asset Exemptions

In a Chapter 7 case, the trustee has the authority to liquidate assets and distribute the proceeds to your creditors according to the priority scheme set out in section 507 of the United States Bankruptcy Code. However, under section 522 of the Bankruptcy Code, most or all of your property can be kept from the reach of the trustee by the conscientious application of exemptions. Available exemptions vary from state to state but, typically, exemptions exist for your primary residence, automobile, household furnishings and other items.

Meeting of Creditors

Soon after you file your bankruptcy case, you will receive a notice for a meeting of creditors. This usually occurs within four to six weeks after the bankruptcy petition is completed. At the hearing, the trustee will ask you questions regarding your assets, income and other information contained in your bankruptcy petition. The trustee will report to the bankruptcy court regarding the information you provide during the meeting of creditors. For most consumer debtors, this is the only hearing they will attend in their bankruptcy case.

Contact Robleto Law now to find out more about the bankruptcy process and for an immediate, confidential consultation about your financial situation by calling the number at the top of the screen, or simply fill out our quick contact form.

Debt Lawyer in Pittsburgh

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How do you stop all of the calls from obnoxious creditors once and for all? There’s no need for a new telephone number. Call a qualified debt attorney in Pittsburgh today. We will not charge you a fee for a no nonsense conversation. We are lawyers; we are not a bankruptcy mill and we are not interested in selling you a product that is not a good fit for you. We consider your present financial position and future goals.

We will discuss your debt and your expectations. Are you looking to buy a house in the next year or save the home you live in now? Do you owe more on your car than it’s worth or need to replace it but aren’t sure whether you can? Talk to a Pittsburgh bankruptcy lawyer.

We stop creditors calls. We stop foreclosures. We stop law suits. We help you discharge most unsecured debt obligations. We help you get a fresh start.

Credit Card Debt

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The ease and convenience of credit cards is undeniable. However, quick access to credit often becomes a pathway to burdensome debt. Sometimes this is the result of frivolous spending. Many people continue to finance that two dollar, late night Taco Bell feast during college, many years after graduation. For others, a medical emergency or loss of income forced them to rely upon credit cards to live.

If your credit card debt is becoming unmanageable, it’s time to consider options other than continuing to blindly pay your monthly minimum. Consider how much better off you would be if you did not have to spend hundreds of dollars each month on credit card payments. If your financial condition would be drastically improved without your credit card debt then you owe it to yourself and your family to contact an insolvency expert. A bankruptcy attorney can evaluate your unique financial condition and determine what course of action is most appropriate for you. Whether a debt-workout plan, bankruptcy filing or some other action is most suited for you, contacting a professional for a free consultation could be one of the most rewarding calls you will ever make.