What is the difference between filing Chapter 7 and Chapter 13 bankruptcy?

Are you facing financial difficulty and looking toward the possibility of filing for bankruptcy? While this can be a difficult decision, there are many benefits to filing a Chapter 7 or Chapter 13 bankruptcy. It can discharge some or all of your debt and help you get back in control of your finances, all while protecting you from bothersome creditors. There are two main ways a consumer can file for personal bankruptcy. These are Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy:

This is commonly used when:

  • You have little property except for the basic necessities like furniture, clothing, etc.
  • You are unable to meet the basic expenses in your life or have little or no money left after paying your bills
  • Available to you as long as you qualify under the ‘means test’ and have completed a pre-filing session with a credit counselor

There are many advantages to a Chapter 7 bankruptcy, such as:

  • There is no minimum amount of debt required to file
  • Most unsecured debts can be discharged, sometimes even as quickly as in just few months
  • Protection against harassment from creditors
  • Your wages and possessions purchased after the discharge of debt are yours to keep

Chapter 13 Bankruptcy:

This is commonly used when:

  • You have a large amount of equity in a home or other property and you do not want to lose it.
  • You can pay your basic living expenses, but are falling behind on your scheduled debt payments.
  • Your unsecured debts are below $360,475 and secured debts are less than $1,081,400.

There are many advantages to a Chapter 13 bankruptcy, such as:

  • You do not lose all of your property and gain more time for your past due account payments
  • You will only have to make one monthly payment to the bankruptcy trustee, keeping you from having to maintain direct contact with your creditors during the period of protection
  • It may be possible to protect Co-Signers with this type of filing

Schwilm & Lezman, P.A. Bankruptcy Attorneys can answer all your questions and assist you with creating a solution that works for you so you can rebuild your life. Call us for immediate legal assistance at (704) 567-3824 for our Mooresville office . Our experienced attorneys can help you get debt free in these areas: Mooresville, Mount Holly, Gastonia, Gaston, Iredell, Statesville, and Belmont.

The benefits of filing bankruptcy

Bankruptcy is usually the last thing most consumers would think of when trying to resolve a bad financial situation. Bankruptcy, while a serious decision to make, does offer consumers a legal way to relieve themselves of debts that they otherwise may not be able to resolve. Bankruptcy offers you a fresh start financially as well as protection from being harassed by creditors.

Chapter 7 is typically filed by consumers that have few if any assets. It can help consumers start over, with their past debts relieved. Chapter 13 is for those consumers that have a major asset they wish to keep, such as a house. It can help consumers by getting rid of some debt while making it easier to manage the remaining debt.

Both Chapter 7 and Chapter 13 filings have advantages and disadvantages, so it is important to fully research your options and discuss them with an attorney experienced in these processes.

Bankruptcy is a hard decision to come to and you will benefit greatly from professional advice. Schwilm & Lezman, P.A. Bankruptcy Attorneys can answer all your questions and assist you with creating a solution that works for you so you can rebuild your life. Call us for immediate legal assistance at (704) 567-3824 for our Mooresville office . Our experienced attorneys can help you get debt free in these areas: Mooresville, Mount Holly, Gastonia, Gaston, Iredell, Statesville, and Belmont.

How to rebuild your credit after bankruptcy.

Almost anyone can get credit soon after a bankruptcy. It’s just a matter of knowing how.

It’s true that bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your creditworthiness. But the effects don’t have to be lasting.

Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms.

Nothing is forever

Ken from Chicago filed Chapter 7 liquidation after unemployment and overspending caused him to rack up more than $20,000 in credit card and other unsecured debt. Four years later, his credit scores ranged from 655 to 719, decent numbers that are just below the cutoff to get most lenders’ very best rates.

“I . . . applied for a secured credit card (usually reserved for people with troubled credit) and was informed that I qualified for an unsecured card — a possibility I hadn’t even considered,” Ken said. “While I am going to be very careful with my new credit (card), I am heartened that creditors consider me an acceptable risk.”

Two things to keep in mind

  • Nothing in credit is “forever.” A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed — if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once.
  • You have to get and use credit to build your credit score. Living on a cash-only basis may be a smart choice for those who really can’t handle credit. But if you want to rebuild your credit score, you can’t sit on the sidelines.

Clean up your credit report

One common problem people emerging from bankruptcy often face is that credit reports frequently show accounts as open and overdue — when in fact they were closed and the obligations wiped out as part of the bankruptcy.

If you encounter this, you need to contact the credit bureaus and insist that those accounts be properly reported as “included in bankruptcy.” It’s the only way your credit can recover.

If you have other serious mistakes on your credit report, those need to be corrected as well. Your credit score is based on information in your credit report, so errors on your report can seriously dampen your score.

Get a secured credit card

You need two types of credit to quickly rebuild your credit score:

  • Installment: auto loans, student loans or mortgages
  • Revolving: credit cards or home equity lines of credit

Schwilm & Lezman, P.A. Bankruptcy Attorneys can answer all your questions and assist you with creating a solution that works for you so you can rebuild your life. Call us for immediate legal assistance at (704) 567-3824 for our Mooresville office . Our experienced attorneys can help you get debt free in these areas: Mooresville, Mount Holly, Gastonia, Gaston, Iredell, Statesville, and Belmont.

Light use of credit cards boost your credit

Most recent bankrupts have trouble qualifying for a regular, unsecured credit card. So the best solution usually is a secured card, which generally gives you a credit limit that’s equal to an amount you deposit at the issuing bank.

Typically, that’s $200 to $500, which may seem like a pittance compared with the credit limits you enjoyed before your bankruptcy. But don’t make the mistake of using your available credit. Maxing out your credit cards hurts your credit score.

You don’t want to charge more than 30% or so of your credit limit, and you want to pay the balance off in full each month. Light, regular use of a credit card is what helps build your credit.

And contrary to what you might have heard, you typically don’t need to carry a balance or pay credit card interest to build your score, since the leading credit scoring formula doesn’t distinguish between balances that are paid off and balances that are carried month to month. Get in the habit now of not charging more than you can pay off every month; your credit score and your finances will be the better for it.

You also shouldn’t grab just any secured card. Look for the following:

  • No application fee and reasonable annual fee. Some secured cards tack huge upfront and annual charges onto their accounts; you don’t need to pay these to build your credit.
  • Reports to the major credit bureaus. You’re not doing your credit score any good unless your payment history is being reported to the three major bureaus: Equifax, Experian and TransUnion. Before you apply for a card, call and ask if the issuer regularly reports to all three.
  • Converts to an unsecured card after 12-18 months of on-time payments. Good behavior should get you upgraded to a regular credit card within a year or two.

Schwilm & Lezman, P.A. Bankruptcy Attorneys can answer all your questions and assist you with creating a solution that works for you so you can rebuild your life. Call us for immediate legal assistance at (704) 567-3824 for our Mooresville office. Our experienced attorneys can help you get debt free in these areas: Mooresville, Mount Holly, Gastonia, Gaston, Iredell, Statesville, and Belmont.