Bankruptcy is an option that can be beneficial if you are in a difficult financial situation. It has the ability to wipe out your debts, disallow calls from solicitation agencies, and can aid you in creating a clean financial slate. Bankruptcy will not clear all of your problems either now or in the future, but it can help you prevent further deadening. Choosing bankruptcy means taking advantage of the new beginning you have created. It also means taking responsibility with future financial decisions so you don’t end up in the same situation again.
How Long Will Bankruptcy Stay on My Credit Report?
A bankruptcy will show on a filer’s credit for up to 10 years sum. Those years begin the day you file for bankruptcy.
Bankruptcy does not keep you from acquiring a house, car, loan, or credit card for those ten years. In all likelihood, you may be able to recover your credit before your bankruptcy is even over. Your credit report is based on many factors, which include your income and the debt you acquire afterward the bankruptcy. It is also based on whether or not you are paying your existing debt on time. If you try to rebuild your credit, you must pay your bills and existing debt on time. When you use a credit card, you must pay the balance in full each month. If you need a car, you can get one. But make sure you make payments on time, as delayed payments will hurt your credit. Just be optimistic. Over time, your credit will amend, as long as you play by the aforementioned rules.
Your credit report should show the debts you have been released, notified by a zero proportion, are no longer owed. If debts are incorrectly reported, your credit score will be affected negatively and this makes it more difficult to regain credit. If you see the information on your credit report is incorrect later you’re discharged from bankruptcy, file a conflict with the credit agency to fix these errors.
Which Debts Do I Still Owe After Bankruptcy?
After bankruptcy, most of what you owe is “discharged.” Once discharged, these debts are not your responsibility anymore.
There are some types of debts that do not simply go away with bankruptcy. Here are some examples that often are not discharged by bankruptcy.
- Financial support due to a partner and/or children.
- Loans for students only. Although you can ask the court to dismiss these payments, they are rarely discharged by bankruptcy. They may make exceptions for persons with an “undue severity,” including if you become handicapped, or if the school closed before you graduated. There are, however, ways to reduce the monthly payments.
- Money fraudulently or falsely borrowed. Creditors can find ways to deem your debt non-dischargeable if they find you have lied or withheld information. Some creditors, often credit card companies, will blame debtors even there is no evidence of malpractice. Their mission is to frighten people into reaffirming their debts. If you haven’t attached fraud, never reaffirm a debt. The company may even have to pay your lawyer fees if they file a fraud case and you end up winning.
- Taxes. Most debts incurred by taxes are not dischargeable. There are certain fate that do not adhere to the norm which need to be discussed with a lawyer.
- Crime fines. Even traffic tickets are not excused.
- Fees connected with drunk driving.
Do I Still Owe Secured Debts (Mortgages, Car Loans) After Bankruptcy?
This will depend on the type of debt. “Secured debts” matters when you give collateral on a loan, such as a lien on a property, a mortgage, or a deed of trust. Commonly, mortgages on homes, or car loans are used. This type of secured debt can often become complicated.
In bankruptcy, even a secured debt is canceled along with all of your other personal debts you were previously obligated to. In consequence, a creditor cannot sue you for collection of money after your bankruptcy. This means a creditor can’t sue you after a bankruptcy to collect the money you owe. Your Dallas bankruptcy attorney can walk you through this process.
The creditor can, however, take back the collateral if fail to pay your debts. For instance, if you are no longer able to pay your mortgage or loan on your car, they can get license to keep your home or take back your car. The creditor also has the option of wait for your bankruptcy to end before they take action. A secured creditor may not be able to sue you for your debts, but they can definitely repossess your collateral.
If you then have the need to keep your collateral that is securing your debt, its imperative to become current on your payments and continuously pay them not only while your bankruptcy is in effect, but also after it is over. You must also stay current on any required insurance, and reaffirming the loan may be necessary.