How Long Will a Bankruptcy Affect My Credit?

How Long Will a Bankruptcy Filing Impact Your Credit?

If you have opted for bankruptcy as a way to get your finances under control, you may be wondering how long the bankruptcy filing will remain on your credit report, and how long it will have an impact on your ability to obtain credit.

How long the bankruptcy will actually appear on your credit report depends on the type of bankruptcy you filed. With Chapter 7 liquidation, where you permanently discharge debts, your credit report will reflect the bankruptcy filing for 10 years. With Chapter 13, though, where you agree to repay your creditors under new terms, the bankruptcy filing only shows up for seven years. There are some situations where the bankruptcy may stay on your credit record for a longer period. For example, if you apply for a loan in excess of $150,000, the potential lender may see the bankruptcy filing, even though it has been more than 10 years.

How to Minimize the Impact of a Bankruptcy on Your Ability to Obtain Credit

When a potential lender considers your creditworthiness, they will likely look at your credit report. In many instances, though, that will be only one of many factors. Many lenders are far more interested in what you have done lately, as opposed to what you did a number of years ago. If your credit report shows that you have made all payments in a timely manner since your bankruptcy, a lender may be inclined to extend credit, perceiving that you have developed new habits, or that the bankruptcy was the result of an illness, injury or other unforeseen incident, and not the result of poor money management.

The other important thing to do, if you want to improve your chances of getting credit, is to minimize the use of available credit. If you have a credit card, don’t use it unless absolutely necessary, and pay it off every month or as soon as possible.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Recovering From Chapter 7

In most cases, a Chapter 7 Bankruptcy is discharged only a few months after the filing debt. So, an experienced bankruptcy attorney in Camden can get your family a fresh financial start almost immediately. Once you’re free of the obligation to repay many outstanding debts, what should happen then?

Why People File, and How Bankruptcy Helps

Some people file Chapter 7 in the wake of a short-term financial crisis, such as a job loss, a divorce or a serious illness. 76 percent of American families live from paycheck to paycheck, so most lack savings to weather these rough fiscal storms. Once you’re back at the starting line, you’re in a position to resume the spending and money management patterns that you exercised before.

Other people file bankruptcy because of a financial reverse. Perhaps income from a stock portfolio dried up due to the economic downturn, a home mortgage became unaffordable or a small startup business never really got started. Bankruptcy eliminates the debts that you cannot pay, which generally solves these problems.

Still others have made poor financial decisions. They’ve overspent on luxury items or amassed gambling debts. Bankruptcy, and especially the debtor education class, is a good way to reassess spending habits and get on the right track.

The truth is that most people file bankruptcy due to some combination of all these issues; for example, a family might have been barely able to service its credit card debt, and then a few days in the hospital put them permanently in the red.

Moving Forward

It’s very important to stay current on secured debts, like your car note and home mortgage. Paying your bills on time is the best way to build your credit score.

Once you receive a Chapter 7 discharge you may be inundated with credit card offers. That’s because the lenders know that you cannot file another Chapter 7 for another eight years. While there’s no need to go overboard, talk to your attorney about the best card for you. Charge something every month and pay off the balance every month, and your FICO score will go up even further.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

When Can I Start Rebuilding My Credit after a Bankruptcy?

How Soon Can You Start Reestablishing Credit after Bankruptcy?

If you’ve had to file bankruptcy, for any reason whatsoever, you may be wondering how soon you can start to rebuild your credit, as well as the best ways to do so.

You Can Start Immediately

There are no legal restrictions on how soon you can begin to reestablish credit after a bankruptcy. Though you may find fewer opportunities to do so, and incur greater expense, there are companies that will take the risk. You should understand, though, that the interest rates and penalties assessed to sub-prime borrowers (which you will be after a bankruptcy filing) are significantly higher than for most borrowers.

The reality, though, is that you should take some time to get on your feet before you try to incur any new and significant debt. By simply paying your existing obligations—rent, utilities—in a timely manner, you start to rebuild your creditworthiness.

Depending on the type of bankruptcy you filed, you may actually become more attractive to some lenders after a bankruptcy. In fact, it’s pretty common for persons who’ve just completed a bankruptcy to start receiving offers for credit cards, often within a month. Some may be secured credit cards—where you must deposit a certain amount to have the card—but they can help you begin to rebuild yoru credit. The key is making payments in a timely manner.

If you filed Chapter 7 liquidation, your debt-to-income ratio, one factor considered by lenders, will be dramatically reduced. If you have income, but little debt, a lender may perceive that you can afford to take on a new obligation. You can reap the same benefit in Chapter 13, but it typically takes longer, as you will be paying down existing debts over a three-to-five year period.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

How Do I Find a Trustworthy Bankruptcy Attorney?

Finding a Bankruptcy Lawyer You Can Trust

Making the decision to file a bankruptcy petition is a difficult decision. But choosing the best bankruptcy attorney for your situation can be even more intimidating and stressful. There are a lot of attorneys who will handle a bankruptcy for you. How do you know you are getting one you can trust, who will really do what’s best for you, and not simply take your money and run you through the same process as all their other clients?

Don’t Make Your Decision Entirely on How Much It Will Cost

Because you are already facing financial difficulties, it may seem wise and prudent to minimize the cost of a bankruptcy. Unfortunately, as with most things, you will likely get what you pay for. Many bankruptcy attorneys advertise flat fee arrangements, promising to complete your bankruptcy for a specific price. It’s important to understand that the only thing attorneys have to sell you is their time. So, for your case to be profitable to them, they need to minimize the amount of time they spend on it.

That’s not to say that you can’t be well-represented by an attorney charging a flat fee, but you want to be clear up front exactly what your attorney will do for that fee. For example, if a creditor challenges your filing, will the fee cover the costs of any legal proceedings? Probably not.

It’s Better to Hire Someone Who Focuses on or Handles Only Bankruptcy

Ask the prospective attorney how many years he or she has handled bankruptcy, as well as what percentage of the practice it comprises and how many bankruptcies the attorney has handled. If your case is not complex, you may be fine with a general practitioner for whom bankruptcy is a small part of the practice. But to get the best representation, you want a specialist.

Make Certain Your Attorney Understands the Revised Bankruptcy Code

Congress made significant revisions to the Bankruptcy laws in 2005. Your attorney should be up-to-date on all changes in the law.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Should You File For Bankruptcy?

One of the crucial reasons that individuals file for bankruptcy is to receive relief from their creditors. The initial relief arrives in the form of an automatic stay. The automatic stay goes into effect immediately upon filing for bankruptcy. In general, the stay prohibits collectors from continuing collection activities unless and until the Court gives them permission to continue.

Bankruptcy advertisements often claim to:

The automatic stay, applied when applicable, ceases all of these actions.

Chapter 7 Bankruptcy

Chapter 7 is a “liquidation” bankruptcy. If an individual receives a discharge in their bankruptcy, the Debtor’s personal liability to pay for most of their debt is removed. Therefore, a chapter 7 can bring relief from creditors and resolve the debt issues. However, there are many exceptions, so it is vital to seek an experienced attorney.

Valid reasons to file under chapter 7 include:

  • Relief from the collection process when left with no other alternatives
  • In order to deal with the debt that has become unmanageable (outside the assistance of bankruptcy)

Whether you have reached the threshold in the above areas is the determining factor for whether or not to file.

Is Bankruptcy Right for You?

Learn whether bankruptcy is the right choice for you. Talk your debt-relief options over with an experienced attorney at the southern New Jersey law firm of John Hargrave and Associates. We offer free confidential consultations. Call 856-547-6500, or contact us online.

“Meaningful Review” by Collections Attorneys

U.S. District Judge Kevin McNulty, in the District of New Jersey, ruled last week in Bock v. Pressler & Pressler that a debt collection law firm violated the FDCPA (Fair Debt Collection Practices Act). The law firm apparently did not conduct a “meaningful review” of a collection claim filed against a consumer.

Bock had filed a federal court action against Pressler, alleging that Pressler had filed their State complaint against Bock without meaningful review by an attorney. His case work (Pressler employees working on behalf of the debt holder – Midland Funding LLC) was carried out by non-attorneys (a non-issue), but when it came time for the attorney review prior to filing the case with the State, the firm’s computer system shows a file accessed for review for only four seconds.

The standards set forth in the case Lesher v. The Law Offices Of Mitchell N. Kay in 2011 played a role in Judge McNulty’s decision. McNulty wrote that Lesher “establishes that it is false and misleading, within the meaning of FDCPA, for an attorney to send a debt collection letter without having meaningfully reviewed the case.”

Credit Card Debt HELP When You Need it Most

Regular, hard-working people get in over their heads with credit card debt and collections for many reasons. No matter how you got into deep credit card debt, there is a way out. In this country we do not put people in debtor’s prisons. Rather, our Constitution, as originally written in 1797, provides people the opportunity for a fresh financial start. Eliminating credit card debt can seem next to impossible when you don’t know your options. Our debt-relief attorneys can help you understand your options so you can make an informed decision about filing for bankruptcy and eliminating credit card debt.

Contact John Hargrave and Associates

The law firm of John Hargrave and Associates in Barrington, New Jersey, can help you regain your financial footing. Contact us online or call 856-547-6500 to schedule a free consultation with an attorney who has been helping people resolve difficult financial issues since 1977.

Dealing With the Emotions of Bankruptcy

The Emotional Toll That Comes With a Bankruptcy Filing

Maybe you are just considering filing for bankruptcy protection, or maybe the process is complete or nearly complete. Here are some of the common emotions people express when considering or involved in a bankruptcy proceeding — shame, sadness, anger, grief, helplessness.

In our culture, which has wrongfully associated bankruptcy with failure, these emotions are neither uncommon nor unrealistic. But they are unfair, and here’s why.

The Bankruptcy Laws Were Enacted as a Benefit, not as a Punishment

Bankruptcy laws have been around for centuries. The famous Dutch painter, Rembrandt, sought protection in bankruptcy. Legislators have understood for hundreds of years that financial struggles are seldom the result of careless or profligate behavior, but are more often a consequence of bad luck or circumstance.

Studies support these conclusions. In research conducted at Harvard University, fewer than one percent of bankruptcy filings involved any abuse of the system. In fact, the single factor that most often led to bankruptcy was illness or injury.

Some of the Most Successful People in History Sought Bankruptcy Protection

The myth that bankruptcy is a sign of failure is most powerfully refuted by looking at some of the people who have filed for bankruptcy — Henry Ford, Donald Trump, Mark Twain and Abraham Lincoln.

Dealing With the Emotions That Come With a Bankruptcy Filing

If you are inclined to beat yourself up because you had to file for bankruptcy, remember that you are in good company, and understand that the bankruptcy laws were put in place to help you do exactly what you are doing — get a fresh start. Don’t let the judgments of others, most or all of whom have never experienced the difficulties you face, keep you from getting the benefits the law was intended to provide.

Contact John Hargrave and Associates

We have provided comprehensive bankruptcy counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).

How Come I Can Be Thrown in Jail for Not Paying Child Support If I’m in Bankruptcy

Bankruptcy and Delinquent Child Support Payments

You are behind on all your bills, including your child support. Maybe you lost your job, maybe you’ve had a difficult time getting back on your feet after a divorce or maybe you’ve been sick or hurt. So you decide to file for bankruptcy, having heard that a bankruptcy filing will keep creditors from harassing you. But then you get a notice from the court that, unless you pay past-due child support, you could face incarceration. How can that happen? Shouldn’t the bankruptcy laws protect you?

The simple answer is no. The bankruptcy laws do not allow for the discharge of child support (or spousal support) obligations in bankruptcy. So the laws that apply to most other debts simply do not apply to child support obligations. The state agency that has responsibility for collecting and disbursing child support payments can still take any action to try to collect those payments, from calls and letters to garnishment of wages to seizure of assets to jail time. Furthermore, child support arrearages must typically be paid off in full in a Chapter 13 proceeding.

One of the important things to remember is that a jail sentence is based on a finding of “contempt of court.” If you are truly without income — not just simply avoiding paying child support — a judge may be less inclined to order jail time. If you have some income, but not enough to pay child support and other creditors, you may want to consider a Chapter 7 bankruptcy, which will potentially eliminate all or most other debt so that you can afford child support payments.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Do I Really Need a Lawyer to File for Bankruptcy?

Filing Bankruptcy on Your Own — Can You??? Should You???

When you are struggling to make ends meet and have concluded that your best option is probably to file for protection under the federal bankruptcy laws, the last thing you may want to think about is paying money (that you don’t have) for an attorney to help you file. Can you do without the services of a lawyer in the bankruptcy process? Better yet, even if you can, should you?

The Bankruptcy laws do not require that people filing for bankruptcy have an attorney, but there are a number of good reasons why you should hire an attorney to help you file for bankruptcy.

A skilled bankruptcy attorney will help you to determine if you should file a Chapter 7 or Chapter 13 bankruptcy case. The success rate of Chapter 13 bankruptcy cases filed without an attorney is less than 5%.

With the changes imposed by the revisions to the bankruptcy law in 2005, you must now demonstrate to the bankruptcy court that you qualify for Chapter 7 protection, by completing a “means test.” The means test essentially determines whether you have the resources to repay your creditors over a three-to-five year period. The means test is fairly complex, but an experienced bankruptcy attorney will know how it works.

Bankruptcy has its own lingo. If you don’t know what a “domestic support obligations” or “priority unsecured debt” or “secured debt” is, then you will not be able to properly complete the bankruptcy forms. A bankruptcy lawyer knows bankruptcy lingo and can ensure that you provide all of the information necessary to the Bankruptcy Court.

To file a bankruptcy case the Court charges a $300 or $335 filing fee (depending on the chapter). Many cases where the person filing has no lawyer are dismissed because the person filing did not file all of the necessary paperwork. In these cases the filing fee is often forfeited and another filing fee must be paid in order to get bankruptcy relief. Cases filed by lawyers have a very low rate of dismissal.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).

When Pride Prevents a Person From Filing for Bankruptcy

Pride — One of the Biggest Stumbling Blocks to Exercising Your Rights in Bankruptcy

In our wired and connected world, there’s a lot of hot air that makes its way around, talking about “high rates of bankruptcy” and implying that bankruptcy is simply a sign of personal failure. Unfortunately, most of the people making these judgments have never experienced the hardships that lead people to file for bankruptcy. Statistics show that the vast majority of bankruptcy petitions follow the loss of a job, a divorce or a serious injury or illness. And the critics forget that some of the most successful people our country has ever seen — Henry Ford, Donald Trump, Mark Twain, Abraham Lincoln and Ulysses Grant — all sought protection in bankruptcy.

The unfortunate consequence of the inaccurate and unnecessary criticisms of those who seek protection in bankruptcy is that, as a result, many who could benefit immensely from a bankruptcy filing fail to do so out of a distorted sense of personal pride. But the decision to file for bankruptcy ought to be a business decision. You should consider your personal finances from a business perspective and, if the best business decision is to start over, you should use the bankruptcy laws to do just that. Pride won’t alleviate your stress and won’t help you put a stop to the endless calls and letters from creditors and collection agencies.

It’s also important to remember that the founding fathers believed in the concept of bankruptcy — not as a punishment, but as a right. They believed in it so much that they included a provision in the U.S. Constitution requiring the federal government to enact uniform laws on bankruptcy throughout the United States.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.