Chapter 13

How to Recover After Bankruptcy

Most of us hope that we never experience bankruptcy; however, there is no telling when we could become its victim. Bankruptcy might be a taboo word for most people, but it isn’t new – it is a fact of life. Despite what people might say, it is possible to recover from it. Here is how you can get back on your feet after bankruptcy.

·        Determine What Went Wrong

There is always a reason why an individual declares bankruptcy. To ensure that you don’t experience the same problems again, determine what went wrong. Here are some common reasons for declaring bankruptcy:

Medical Debt

Most people in America file for bankruptcy due to medical debt, and that is why it is essential to have health insurance coverage.

Loss or Reduction of Income

Loss or reduction of income can make things very difficult for you. If this was the reason behind your bankruptcy, you would have to manage your expenses better in the future.

·        Create a Budget

Following bankruptcy, you should create a budget. When creating a budget, set realistic restrictions on your spending and see your financial plan as a road-map to help you accomplish your savings goals. Set a goal of limiting all your expenses to 50 percent of your income. You can be flexible with your budget and adjust it as your financial circumstances change over time.

·        Pay all Your Bills on Time

Bankruptcy may have discharged your larger debts, but you will still have some financial obligations. If you want to recover, you will have to pay your bills on time and avoid defaults or late payments, although it might be hard. Making late payments can have a negative impact on your credit report. Not only that, but this will also make recovering after bankruptcy more difficult for you.

·        Rebuild Your Credit

You will have to rebuild your credit rating after some time, especially if you want to buy a new car, home, or invest in the future. Don’t try to rush into this; only take on debt that you can afford to pay off quickly. If you already owned a home and were able to keep it during bankruptcy, make sure to make timely repayments every month. Try to avoid products that lead you towards bankruptcy. For example, if you got into trouble because of credit card debt, then you should avoid applying for a credit card to re-establish your credit rating.

Final Thoughts

Bankruptcy isn’t the end of the world. If you stay positive and do everything we have discussed above, you should be able to recover from it and return to normal life. For questions and queries, feel free to reach out to us.

Should You File for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy?

Chapter 7 bankruptcy and Chapter 13 bankruptcy are two common legal options with different consequences, but both are helpful for borrowers who have accumulated too much debt. Chapter 7 ba

Chapter 7 bankruptcy and Chapter 13 bankruptcy are two common legal options with different consequences, but both are helpful for borrowers who have accumulated too much debt. Chapter 7 bankruptcy can help clear some or all of the debt. However, if you file for this type of bankruptcy, you will have to surrender assets such as cash or property. Chapter 13 bankruptcy helps you get some of the debt discharged, but you get to keep your property, and you can repay your debts through a repayment plan. If you have accumulated too much debt and want to file for bankruptcy, you would want to determine which type of bankruptcy would be right for you. We will help you with this.

Should You File Chapter 7 Bankruptcy

If you have very little disposable income, you could consider filing for Chapter 7 bankruptcy. Here are a few things that you should consider if you are struggling to decide whether you should file for Chapter 7 bankruptcy or not.

·         Less Debt-Repayment Load

Chapter 7 bankruptcy discharges some or all of your debt. This means that you won’t have to pay money towards credit card bills or loans, and you can use that cash for other things such as basic household expenses.

·         Relief from Collectors

If you are struggling to pay your debts, Chapter 7 bankruptcy can stop debt collectors from taking any legal action against you. When you file for Chapter 7 bankruptcy, some of your creditors would be restricted from contacting you, collecting cash from you, continuing wage garnishment, and starting lawsuits against you.

·         Loss of Assets

One of the major consequences of filing for Chapter 7 bankruptcy is the potential loss of assets. You might have to give up your property or cash, depending on the laws in your state.

Should You File Chapter 13 Bankruptcy

If you want to keep the property that you own, Chapter 13 bankruptcy might be a better option for you. Here are some things that you should consider to determine whether Chapter 13 bankruptcy is right for you or not.

·         Repay the Debt

Chapter 13 bankruptcy can help you repay your debt in a more cost-effective and convenient way. Through it, you will create a plan to repay some or all of your debt. You can make monthly payments towards all your debts based on the repayment plan. Your monthly payments might be reduced, which would make it easier for you to repay them.

·         Discharge Your Debts in Three to Five Years

With Chapter 7 bankruptcy, your debts will be discharged quickly, but this doesn’t happen with Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, your debts won’t be discharged until the completion of the repayment plan, which generally takes about three to five years.

·         You will have to file for Chapter 7 Bankruptcy if You Have Sufficient Income

You will only qualify for Chapter 7 bankruptcy if you can prove that you don’t have the money to repay your debt. If you have sufficient income, then you won’t be able to file for Chapter 7, and Chapter 13 bankruptcy will be your only option.

Final Thoughts  

Bankruptcy is a very important decision with some serious consequences. You should consider your options and determine whether you should file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.

5 Things You Should Know Before Declaring Bankruptcy on Student Loans

Declaring Bankruptcy on Student Loans

Student loan debt is on the rise across the country as students take in more and more loans to finance their rising tuition fees. In fact, Americans collectively own more than $1.5 trillion in student debt, and the figure is still rising. If you are struggling with managing your student debt, you may wish to file for bankruptcy. However, there are some things you should know before declaring bankruptcy on student loans.

1. Qualifying for Chapter 7 Is Difficult

To file for chapter 7 bankruptcy, you must first make sure you are eligible for it by passing the means test. The income requirements often disqualify many bankruptcy filers from filing under this Chapter.

2. Filing for Bankruptcy Won’t Guarantee a Debt Discharge

Even if you qualify for Chapter 7, you would still have to prove to the court that you are not in the position to pay your student loan debt. You will have to convince the judge that the debt is inflicting extreme hardship on your well-being and that your financial situation is unlikely to change in the near future. As one would expect, cases that win out are quite rare. Filing under Chapter 13 is easier, but it would only reorganize your repayment plans based on your judged ability to pay back the loan.

3. Filing Bankruptcy Is a Stressful Process

It should be stressed that filing for bankruptcy is a lengthy process. Debt discharge can take up to 4 to 6 months under Chapter 7 – that is if you win at court. During the process, you will have to manage finances for the legal fees involved, as well as go through a lengthy list of paperwork. Therefore, seeking the advice of an experienced attorney can help ensure your case is successful. Don’t be discouraged though. While your student loans may not be discharged and the process may be stressful – you may still be able to get some relief. Bankruptcy can eliminate your other debts freeing you up to tackle your student loans or allow you to put them in a reorganization plan.  For some loans, there may even be an income-driven repayment program you can avail yourself of in conjunction with your bankruptcy case.

4. You Can’t Hack Your Way out with a Credit Card

Some clever-mind students may think that they can cheat the system by putting all their student debt on their credit card and then file for its bankruptcy. However, such an attempt would be categorized as fraud. If the court thinks that the attempt was deliberate, expect some negative consequences.

5. It Will Impact Your Financial Health

A completed bankruptcy can linger on your credit report for up to 10 years, impacting your financial health. This may sound discouraging, but not filing for bankruptcy and allowing your debt issue to worsen would also negatively impact your credit score. Discharging your debt allows you to start anew with a clean slate, and many are able to rebuild their financial well-being even before the bankruptcy gets dropped off their report.

Get Legal Help

If you fail to plan, you plan to fail. As mentioned before, filing for bankruptcy is a tiresome process and the court case will not always result in your favor. Therefore, a qualified legal attorney is essential for helping you navigate successfully through the figurative legal labyrinth.

At the Law Offices of Sean T. Flynn, PLLC in Austin, TX, I offer personalized legal assistance for filing under Chapter 7 and Chapter 13 the bankruptcy code. With over 8 years of experience in the profession, you can be sure to obtain a satisfactory resolution in a bankruptcy case. Call + 512-640-3340 or contact me online to schedule an appointment.

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