Bankruptcy Questions and Answers

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Can I keep my car?

There are multiple ways to keep a financed personal vehicle while filing Chapter 7 bankruptcy. One possible option is redemption, which not only allows retention of the vehicle but also reduces the amount to be paid for the vehicle. A bankruptcy attorney at Bellah Perez, PLLC can help you determine the best way to keep your financed vehicle while at the same time getting the bankruptcy relief you need.

Will filing bankruptcy ruin my credit forever?

No, it will not. Filing bankruptcy will impact your credit upon filing however, after a year of filing bankruptcy most debtors find their credit scores have increased approximately 125 points from the date of filing. In today’s economy, bankruptcy has become a much more frequent occurrence and the consequences of filing have drastically decreased in their severity. Normally, the only place that a bankruptcy can be viewed by a creditor is a credit report. When a bankruptcy is filed, almost all of the debt on a credit report goes to zero while income stays the same. Thus, this improves the credit score, giving most bankruptcy filers a better credit score shortly after filing.

Today, those who file bankruptcy are able to obtain credit right after the bankruptcy process is complete (4 months in most circumstances). This includes obtaining new credit cards and car loans. However, the Annual Percentage Rate (APR) on these items may be high if they are obtained too soon. Therefore, an individual who files bankruptcy should spend about six months to a year raising their credit score to a point where the APR rises to a rate that is reasonable and similar to the rate obtained by the individual before the bankruptcy was filed.

An individual who files bankruptcy can increase their credit score almost immediately after the bankruptcy process is finished. This can be done by obtaining a secured credit card and using it like a regular credit card. In addition, any payments that are made to any reaffirmed debts (debts that are secured by a car or a house where a new contract is signed for these items during the

bankruptcy) also count towards increasing the credit score
of an individual bankruptcy filer. In most circumstances, bankruptcy is a new
start for any individual who has come upon hard times.

What do I bring to the first meeting?

  1. A list of every bill that you owe.
  2. A copy of any lawsuit that you are involved in.
  3. Two pay stubs representing an average pay period which include year to date income.
  4. Make sure you are aware of all interests in real estate in which you have any (even a partial) interest (including real estate you are purchasing, that you already own, or that your parents or another relative may have put your name on the deed).
  5. A list of any cars, trucks, trailers, boats, motorcycles, mobile or motor homes you own.
  6. Have some idea of what your home, jewelry, and other property is worth.
  7. Make sure you are aware of the cash value of any whole life insurance policies you have.
  8. If you are self-employed, make sure you know all business debt for which you are personally liable.
  9. If you have used your credit cards for purchases, cash advances or balance transfers in the past 4 months, go through your statements and calculate how much money you have charged to each card.