Not All Debt is Discharged through Bankruptcy

Just because you file and are granted bankruptcy doesn’t mean you won’t be responsible for paying back some of the credit card debt you’ve accrued.  Some transactions – particularly ones made for non-essentials after the debtor was unable to make payments on time – are looked at unfavorably by the courts. If the courts see that you were unable to make steady, on-time payments, but were still charging nonessential items like travel, entertainment, or electronics to your card, they will likely be hesitant to discharge those debts.  

If you are considering filing for bankruptcy, the best thing to do is to immediately stop using credit.  All types of credit card transactions should be stopped, particularly if they are in a non-essential category or for something other than food or gas.  Even essential purchases can fail to be discharged if your card use was recent. 

Other types of debt that will likely not be discharged through bankruptcy are debts for taxes, fines, alimony, or child support.  Student loan debts are equally as difficult to have discharged – mainly because many of them are funded in part or in full by the government. You might get a portion of the interest rates lowered but depending on the lender of the loan, full discharge of student loan debt is unlikely. 

   

Filing for bankruptcy might be a good option if you have mostly consumer debt on high-interest credit cards.  If most of your debt is not consumer debt, or is debt related to student loans, bankruptcy might still be a viable and wise option for you.  An attorney will be able to look at your specific situation to help you determine all of your options, including whether or not bankruptcy is the best idea for you to get back on track financially.  

The Truth About Credit Cards and Bankruptcy

Used correctly, credit cards can be a useful financial tool. However, if your balances are spiraling out of control, they can become an awful burden. Nobody plans on running up credit card balances but once you got a balance you can’t handle they can become a burden. Use our debt calculator and learn the sobering truth of how long it will take you to pay off your credit cards if all you can do is pay the minimum. As you move through life, the debt begins to weigh you down, keeps you from sleeping and starts to affect your family life and work and prevents you from getting ahead.
We can help!

How to tell if your credit card debt is out of control

Can you answer yes to two or more of the following questions?

• Have you maxed out more than one credit card?
• You don’t know how much debt you have?
• Are you flipping debt from one credit card to another?
• Do you leave your monthly credit card statement unopened?
• Are you struggling to pay the minimums on your credit cards trying to preserve an inflated credit score, hoping for better days ahead?

If you answered yes to two or more of these questions, you should talk to one of our experienced bankruptcy attorneys. The best way is to set up a free no obligation consultation by calling us at 305-663-3281. What is more important your family or your American Express?

Credit cards post-bankruptcy

One of the common myths regarding bankruptcy is that you won’t get new credit. Not true! In fact, many of our clients get credit card offers within 3 months of their bankruptcy discharge. True, these are small $500 limit cards with ugly interest rates, but they may be the key to rebuilding your credit. Post-bankruptcy discharge all your unsecured debts are wiped out. Unburdened by existing debt, and with your current income, you actually become a fairly attractive candidate for new debt. Use these new cards heavily, but responsibly (PAY THE TOTAL BALANCE EVERY MONTH OR DON’T USE) - they can be the key to reestablishing your credit history and getting a 700+ credit score within 2 to 3 years. Some of clients have been able to finance cars at a decent rate with 12 months of the bankruptcy discharge and purchase a house within 24 months. The key is to use new credit heavily, but to run no balances month to month. You can do it!

To find out more set up a free no obligation consultation by calling us at 305-663-3281.

Rebuilding Your Credit

Rebuilding your credit after bankruptcy can be both a financial and emotional experience. You will feel a great deal of relief once you get your bankruptcy discharge—it’s the fresh start you deserve!

Once your bankruptcy has been discharged; rebuilding your credit begins immediately. After the bankruptcy, be sure and pay any continuing obligations, such as a car payment or rent on time. Being on time on each of your commitments is the surest way to raise your credit score as quickly as possible. 

Within three months of your case being completed you should apply for a new credit card. Either approach your bank or apply on www.creditcards.com for a low limit MasterCard or Visa. Expect to pay a hefty annual fee, but it is worth it. You will immediately raise your credit score if you make your payments on time and pay in full. Be smart, use the cards for purchases you need, not just want and make sure to set the money aside in advance to be able to pay the bill. Remember, the card is not just a “credit card” it is a credit TOOL.

After a few months with the low balance card, you will be solicited for other credit cards with higher limits and lower annual fees. You should accept one of these cards, but please be smart. Don’t use the cards for items you can’t afford. Remember, this is a tool to rebuild your credit. You should have the money available to for each purchase you make. Don’t let the credit card company charge you interest, pay each bill in full and always on time.

After a few months with the second credit card, your score should be climbing to the mid-600’s. This is when you can consider using newly strengthened credit to purchase bigger ticket items, such as a car. Speak with a lender before you go to the dealership. Know how much credit you have and how much of a down payment will be necessary. Remember, this too is a tool to rebuild your credit.

This simple plan is a 18-month post bankruptcy credit repair program. I have had thousands of clients succeed using these steps. A 700 credit score is between 1 ½ to 2 years away for most of my bankruptcy clients. Get started by eliminating your debt and eliminating your stress. Bankruptcy is the ultimate financial stress reliever.

To learn more how to rebuild your credit post bankruptcy, or to learn how filing bankruptcy can let you improve your credit score quickly, call (305) 663-3281 now.