You’ll be glad to know that bankruptcy does not stay on your credit report forever. You can also take comfort in knowing that there are several ways to rebuild your credit rating after you have completed a Chapter 7 or Chapter 13 program. The goal is to start compensating for negative information on your credit report by adding positive information.
The following list provides multiple ways to build your credit score after you have gone through bankruptcy:
You can also ask someone you trust who has an excellent credit rating to co-sign a loan for you. You’ll want to make sure you can make payments on time before doing so, however.
Instead of looking at bankruptcy like a sign of financial failure, consider it a valuable tool that helps you lay the groundwork for a stronger financial future. As you move on in life after bankruptcy, you can increase your borrower’s status with lenders by developing good financial habits. Consider applying for a rewards-based credit card and use it only for regular purchases, such as grocery shopping or pumping gas into your car. Using the card and making payments on time is the key to rebuilding your credit rating.
Long ago, there was a stigma attached to bankruptcy. Many people viewed it as a desperate measure. Today, more and more people are starting to understand that filing for bankruptcy can be a catalyst to future financial success. Encountering financial crises is not uncommon in the modern world. There are many more options available today to resolve financial problems than there were in previous eras. With careful research and experienced guidance, you can determine which type of bankruptcy best fits your needs at this time.
]]>This is not to say that you must know every vocabulary term associated with bankruptcy. There are support resources available, such as a bankruptcy law attorney, who can clarify word meanings and state laws for you during your case.
Following is a list of terms or phrases along with a basic definition of each, which might be relevant to your case if you file for bankruptcy in Georgia:
There are many more bankruptcy terms associated with Chapter 7, Chapter 13, Chapter 11 and other programs. If you encounter a word or phrase you do not understand, it is always best to seek clarification because lack of knowledge could cause you to make mistakes, which might delay proceedings.
While many bankruptcy terms intersect across various programs, some are specific to one type of bankruptcy but not another. Determining which program best fits your needs is one of the first steps to take after deciding to file a petition for debt relief. Each program has its own eligibility requirements, which you must be able to meet to qualify for an application.
If you’re unsure about terminology or don’t know which bankruptcy option to choose, you can seek guidance on the matter. Other factors also help determine which program is best in your case, such as whether you have filed for a specific type of bankruptcy within the past 10 years. Once you choose a program, you can begin the application process.
]]>A debt reaffirmation agreement is a legally enforceable document. This means that, if you sign it, you’re obligated to adhere to the terms or risk penalties under the law. This document basically states that you agree to repay a debt that would otherwise have been a discharge through Chapter 7 bankruptcy.
You can choose to repay a portion or all of a debt that would otherwise be discharged through bankruptcy. This is legal provided that the elements shown in the following list exist at the time:
While it’s always best to act under guidance from an experienced Chapter 7 bankruptcy law attorney, you are not required to do so. However, experienced guidance often keeps people from making mistakes that can wind up making their financial situations worse instead of better.
In certain circumstances, it might be within your best interests to sign a debt reaffirmation agreement. An example might be if you only have one vehicle, and the creditor is having it repossessed as part of bankruptcy proceedings. You might have no other means of transportation to get to work and are not able to purchase a new vehicle.
If you can commit to paying back the loan, it might be a good idea to sign a debt reaffirmation agreement. Doing so means that you would keep your car and have a reliable means of transportation for work. However, it would also mean that you are responsible for paying back the loan according to whatever terms you and the creditor have agreed to implement.
You might sign a debt reaffirmation agreement, then quickly determine that you are not able to pay back the loan. If the bankruptcy court has not yet discharged your debts or more than 60 days have not passed since you filed the debt reaffirmation petition in court, you can cancel the agreement.
]]>The Fair Debt Collection Practices Act (FDCPA) protects you against creditor harassment. The fact that such laws exist, however, doesn’t necessarily keep debt collectors from harassing people; it happens often. It’s important to understand your rights and to know how specific types of debt relief, such as Chapter 7 bankruptcy, create a stay against litigation, meaning if you have filed for bankruptcy under this program, no one can sue you to collect a debt.
There are conditions under which a debt collector may file a lawsuit against an individual who has failed to resolve a debt. If you were to receive a summons regarding such a lawsuit and do not issue a formal response, the court can rule against you and order wage garnishment (money deducted from your paycheck) to pay the debt you owe.
While you will not face arrest for unpaid debts, a judge can issue a warrant for your arrest if you disregard a court summons. What a debt collector cannot do, however, is harass or threaten you in any way.
There are several issues that constitute invalidity regarding a debt collections lawsuit. For example, if a debt collector has filed a lawsuit after the statute of limitations has expired (which, in Georgia, is six years), the judge will likely dismiss the case. If the debt collector has failed to legitimize the debt (prove that you owe it), this would also make a lawsuit invalid. Finally, if you have already discharged the debt by filing for bankruptcy, a collection agency or creditor cannot sue you for it.
In Georgia and beyond, many creditors and debt collectors win lawsuits by default when individuals summoned to court fail to issue a formal response. Being sued to collect a debt can be a scary experience; however, there are often options available to request a dismissal or to obtain a favorable ruling in court, especially if you have filed for bankruptcy prior to receiving a summons.
]]>An automatic stay is an injunction imposed against certain creditors or groups who might otherwise take legal action against someone who owes them a debt. If you file for certain types of bankruptcy, this injunction (automatic stay) prohibits creditors from attempting to collect debt. This would include the lenders of your mortgage loan. If they have already initiated foreclosure, they would not be able to complete the process.
In certain cases, creditors can file a motion for relief. If the judge on the case rules in the creditors’ favor, the court will lift the automatic stay stemming from your bankruptcy petition. This would enable the creditors to continue their attempts to collect a debt.
Another benefit of an automatic stay is that it prevents someone from suing you for damages. An example of this would be if you were involved in a motor vehicle collision and someone files a personal injury claim against you. With an automatic stay in place during bankruptcy proceedings, you have protection against compensatory judgments.
To determine if an automatic stay will help you keep from losing your home or business, you must first determine which bankruptcy program fits your needs. Chapter 7 and Chapter 13 programs are both available to individuals and business owners. If you file under Chapter 7, your assets will likely go through liquidation, and the proceeds will pay off your debt. Chapter 13, on the other hand, is known as the wage earner’s bankruptcy. You must demonstrate proof of reliable income, which enables you to work out a restructured payment plan with your creditors.
Many Georgia residents who might benefit greatly from bankruptcy hesitate to file a petition because they are embarrassed about their financial problems. Many individuals and businesses have been able to use bankruptcy as a valuable financial tool to relieve debt and build back stronger. It never hurts to explore your options. You just might find the key to restoring financial stability.
]]>A lot of people say they have never even heard of Subchapter 5, which makes sense, since it has only been in effect for the past few years. If you are a small business owner who is considering filing for bankruptcy, you’ll want to learn as much as you can about it.
If you own a profitable business in Georgia, it doesn’t necessarily mean you are able to pay your debts. It’s possible to generate a profit and still struggle to make payments for business loans and other debts on time. This is where Subchapter 5 of the Chapter 11 bankruptcy program comes into play.
This subchapter directly pertains to small business owners who are profiting but are still facing a financial crisis that is impeding their ability to satisfy their debts. If you file under this bankruptcy program, and the court approves your petition, your creditors must accept a court-approved repayment plan. Such plans typically last three to five years.
If you have unsecured debt associated with your business, such as a credit card balance that has gotten out of control, you may be able to discharge these debts under Subchapter 5 of the Chapter 11 bankruptcy program. If you’re unsure what constitutes an “unsecured” debt, it is basically any debt you have that does not include collateral, such as a mortgage loan whereby a lender can take possession of a home or business if you default.
Not having to seek creditor approval of a repayment plan is undoubtedly one of the greatest benefits a Subchapter 5 bankruptcy provides. The following list includes several additional benefits:
You must meet eligibility requirements before submitting a Subchapter 5 bankruptcy petition. Such requirements include not having debt that exceeds $2.5 million. It’s always best to carefully review such requirements to determine if a particular program fits your business’ needs.
Never assume that all is lost when your small business in Georgia encounters financial problems. With options like Subchapter 5 bankruptcy available, you may be able to resolve debt and restore solvency in less time than you think.
]]>While it’s best to be an informed person, you need not lose hope if you have a debt that you cannot alleviate through bankruptcy. If you’re in dire financial straits, alleviating as much debt as possible can help get things back on track, even if the court cannot eliminate 100% of your debt. Navigating the bankruptcy system can be complex, which is why it’s a good idea to seek counsel ahead of time.
The U.S. government prohibits certain debts from being dischargeable through bankruptcy. If you owe taxes, for instance, you must pay the debt. Even if you’re approved for a bankruptcy program, your tax debt remains a liability. This is also the case if you owe child support or alimony. These are non-dischargeable debts.
Think of it this way, however -- if you’re able to eliminate all your other debts, you may then have the funds you need to continue to pay non-dischargeable debts. Student loans are usually not dischargeable through bankruptcy, as well; however, in rare circumstances, exceptions to the rule may apply.
Since there are numerous types of bankruptcy, you must first determine which program you’re eligible for and which one is the most viable solution to help you accomplish your goals. Each program works a bit differently from the others. For example, under Chapter 7 bankruptcy, the court will liquidate most of your assets, and the proceeds will pay off your debts.
Under Chapter 13, your lenders agree to a restructured payment plan, and you retain ownership of your assets while continuing to pay down debt. Sometimes, a lender will extend the life of a loan as part of a Chapter 13 agreement or lower monthly payments to make them more economically feasible for you while you regain financial stability. It’s best to seek guidance to learn what options are available and which debt relief program best fits your current financial needs.
]]>So, how do you know if bankruptcy is the best financial decision to make at this time? There are several key issues to consider to help you determine if this valuable financial tool fits your current needs and ultimate financial goals. Before making a final decision, it’s always helpful to discuss your finances with an experienced source who can provide guidance and support.
One of the issues that can help you determine if bankruptcy is the best debt relief option in your case is to assess the “debt/ratio comparison.” If your current debt amounts to more than half your income, then you may be a good candidate for bankruptcy. In addition to this issue, you’ll want to ask yourself whether you have a legitimate means to pay off your debt within the next five years.
If the answer is “No,” then this, too, suggests that bankruptcy is a debt relief option you might want to consider. If, on the other hand, you’re struggling right now because you lost your job or are incurring unexpected medical bills, etc., but you have a plan to generate more income and believe that you can pay back creditors over the next few years, then you might not need to file for bankruptcy; at least, not yet.
You might be hesitant to file for bankruptcy in a Georgia court. Maybe you’re thinking about consolidation options, instead. If so, you must be aware that there are many fraudsters out there who are trying to scam people out of thousands and thousands of dollars by offering phony debt relief programs.
Don’t let someone fool you. Conduct thorough research ahead of time to determine which type of debt relief, including bankruptcy, best fits your needs. Whichever route you choose, it’s imperative to adhere to state or federal laws that may be relevant to your case. Many people seek legal guidance before making their final decisions.
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