How Does Chapter 13 Bankruptcy Affect Your Credit?

You may be interested in utilizing Chapter 13 bankruptcy to get out from under your debt, but perhaps you have been concerned with the effect bankruptcy might have on your credit. That is an understandable concern, but it is important to remember that in many cases, the benefits of filing for Chapter 13 far outweigh the negative impact on your credit report. In addition, as people who are considering Chapter 13 are already in financial trouble, Chapter 13 will ultimately improve their credit score—even though the bankruptcy will typically appear on their report for 7 years. To learn whether Chapter 13 can help you, contact our office today to speak with a St. Petersburg Chapter 13 attorney

Bankruptcy’s Impact on the Credit Score and Credit Report

Almost every consumer in the United States has a credit score and corresponding credit report. Your credit score is a number based on your creditworthiness. A lender may use a credit score to determine whether to loan you money. Some of the loans typically take into account your credit score include the following:

  • Credit cards
  • Mortgages
  • Auto loans
  • Personal loans
  • Business loans

A credit report keeps track of your credit history, so that potential lenders may see what kind of credit you already have available and if there has been any delinquency.

The credit score is a calculation that takes into account many factors, with bankruptcy filings being only one factor among many that will affect the credit score. Therefore, you cannot know in advance the exact effect on the credit score that filing a Chapter 13 bankruptcy will have. What is known is that many people contemplating a Chapter 13 bankruptcy will already have poor credit due to missed payments and default. A Chapter 13 bankruptcy will reorganize the debt, and successful plans will bring the debt out of default. Getting credit back on track by making timely payments will have a positive impact on your credit score, particularly over long periods of time.

Obtaining Credit After Bankruptcy

It is true that a Chapter 13 bankruptcy filing can remain on a credit report for seven from date of filing. Some Chapter 13 filers have been able to obtain new lines of credit within one to three years from the date of filing. For instance, filers interested in purchasing a new home can qualify for a Fair Housing Administration mortgage after having made at least twelve on-time payments under a Chapter 13 bankruptcy plan. This is known as a “seasoning requirement.” Fannie Mae, the nation’s largest mortgage lender, has a two-year seasoning requirement. While many people believe that filing bankruptcy dooms a person to never qualifying for credit again, this is simply untrue.

A Lender’s Perspective on Chapter 13 Bankruptcy

A lender, in determining whether to extend new credit to a consumer, will review the person’s credit report and credit score. If you are delinquent on multiple accounts, you will appear to be a poor credit candidate. A lender will rightfully be concerned that if you are not paying other debts, that you will also not pay this new debt. A Chapter 13 bankruptcy, on the other hand, will demonstrate to lenders that you have the ability to make payments on all debts and you are making an honest effort to do so. After the completion of a Chapter 13 bankruptcy plan lenders may also view you as less of a risk because some or all of the debt was repaid, rather than liquidated.

Call Us Today to Speak with a Chapter 13 Bankruptcy Lawyer in St. Petersburg

Chapter 13 bankruptcy is a great tool to get your credit back on track. The attorneys at Berkowitz and Myer will advise you on whether filing a Chapter 13 bankruptcy is right for you. To find out whether you are a good candidate for Chapter 13 bankruptcy, call the St. Petersburg firm of Berkowitz & Myer at (727) 344-0123 today for a no cost, no-obligation consultation. You can also send us an email through our online contact form.

An Attorney Can Help You Determine Whether Chapter 13 Bankruptcy is Right For You

If you have debts that with which you’re struggling to keep up, you may consider Chapter 13 bankruptcy as a means of alleviating the burden. Chapter 13 bankruptcy can be an excellent option for you—but it is not the only option. The attorneys at Berkowitz & Myer can meet with you for a no-cost initial consultation to determine whether a Chapter 13 bankruptcy would work for you.

Chapter 13 Considerations

Chapter 13 bankruptcy is not for everyone. Since a Chapter 13 bankruptcy involves a three to five-year repayment plan, it requires you to have a source of income to make payments under the plan. If you do not have income, Chapter 7 bankruptcy may be a better fit. The attorneys at Berkowitz & Myer while will take a holistic look at your assets, income, and debt to develop the best Chapter 13 bankruptcy plan available to you so that you can get caught up on your debt while still maintaining your current standard of living.

What Types of Debt Are Ideal for a Chapter 13 Bankruptcy?

Certain types of debt are ideal to address with a Chapter 13 bankruptcy, while Chapter 13 cannot manage other types of debt, such as missed alimony or child support payments. Fortunately, most consumer debts are eligible to be part of a Chapter 13 plan. Common types of consumer debt include:

  • Credit card debt
  • Medical debt
  • Mortgage loans
  • Car loans
  • Personal loans

These types of debt can be included into one Chapter 13 bankruptcy plan so that going forward you are only making one unified payment rather than paying each creditor separately. The attorneys at Berkowitz & Myer will analyze your debt to verify that it can be addressed by the Chapter 13 bankruptcy plan. They will also verify that your Chapter 13 bankruptcy plan payment is not too onerous for you to make, so you can move forward with the expectation that your repayment plan will be successful and you will catch up on your debt obligations.

Bankruptcy Limits

Under the bankruptcy code, there are certain limits as to who can file bankruptcy and how frequently a person may file. Some people may be barred from filing a Chapter 13 bankruptcy, so it is crucial to meet with an attorney to determine whether you are legally permitted to file bankruptcy. In addition, some types of transfers or utilization of debt may be portrayed as misuse, so it is best to meet with an attorney to closely inspect your debt usage so this will not be the case.

Meet with a St. Petersburg Chapter 13 Bankruptcy Lawyer to Learn More

Chapter 13 bankruptcy is an excellent tool to get your finances in order, but it can be a complicated legal process that is not for everyone. It is crucial that you speak with an attorney if you are contemplating filing a Chapter 13 bankruptcy. The St. Petersburg law firm of Berkowitz & Myer offers a no-cost consultation to determine whether you are a good candidate for a Chapter 13 bankruptcy. Call the St. Petersburg law firm of Berkowitz & Myer today at (727) 344-0123 or contact us online to discuss your bankruptcy options.

If You’re Going to File for Bankruptcy, Sooner Is Better Than Later

Financial problems have a way of paralyzing people. When you are in debt and unable to make your payments, every phone call or trip to the mailbox can induce anxiety. As a result, many people who experience financial problems choose to ignore them for months or even years, hoping they just go away. Unfortunately, these problems almost never go away on their own. Often, they result in wage garnishment, accrual of interest, and even lawsuits.

If you realize that your financial problems have gotten out of hand and that, realistically, you only have a slight chance to pay your debts back, discuss bankruptcy with an experienced attorney. At Berkowitz & Myer, we will review the facts of your case at no cost to you and let you know whether we think bankruptcy is right for you. To schedule an appointment with one of St. Petersburg bankruptcy lawyers, call our office today at (727) 344-0123 or contact us online.

The Basics of Chapter 13 Bankruptcy

Chapter 13 bankruptcy is often a good option for people who make regular income and own assets that theyd like to keep. Unlike Chapter 7 bankruptcy, in which a debtors non-exempt assets are sold off to pay back creditors, in Chapter 13, a debtor may keep assetsso long as the debtor stays current on court-approved Chapter 13 payments.

Chapter 13 is often particularly attractive to homeowners who have fallen behind on mortgage payments. First of all, an automatic stay is put into place the moment a person files for Chapter 13. This stops a lender from starting foreclosure and will also stop an active foreclosure from proceeding. In addition, it allows homeowners to include their past due mortgage payments in their bankruptcies, giving them three to five years to pay it off. As long as homeowners stay current on mortgage payments after the past due amount is wrapped up into the bankruptcy, they can stay in their homes while enjoying bankruptcy protections.

At the conclusion of a Chapter 13 bankruptcy, the court will often discharge most, if not all, of a debtors remaining debts. In this way, Chapter 13 can significantly reduce a total debt load while allowing a person to keep assets and obtain a fresh financial start.

Call Us Today to Speak With a St. Petersburg Bankruptcy Lawyer

If youve gotten behind on your bills and are not sure whether youre ever going to catch up, discuss your situation with a bankruptcy attorney as soon as you can.

Berkowitz & Myer offer a free initial consultation where we will take time to fully understand your situation and advise you as to all of your legal options. To schedule an appointment with a bankruptcy attorney in St. Petersburg, Florida, call our office today at (727) 344-0123 or send us an email through our online content form.

Four Chapter 13 Bankruptcy Myths Debunked

Bankruptcy. The very word can cause anxiety and stress for many people. Bankruptcy, however, helps people who fall on hard times get fresh financial starts. In fact, in many cases, people who file for bankruptcy are immediately better off than they were before they filed.

Here are four myths that may hold you back from considering Chapter 13 bankruptcy. For more information, call Berkowitz & Myer to speak to an experienced St. Petersburg bankruptcy lawyer today.

Myth #1: Filing for Bankruptcy Will Ruin Your Credit

Many people in financial distress refuse to consider bankruptcy because they worry that it will ruin their credit. Two things are wrong with this line of thinking. First, simply ignoring bills that you cannot pay will certainly ruin your credit. Second, while it is certainly true that a Chapter 13 bankruptcy will appear on your credit report for seven years, it often has a less detrimental effect than accounts in collections, judgments, delinquencies, or other problems. In fact, in just a few months, many people who file for bankruptcy have better credit than they did before filing.

Myth #2: Bankruptcy Is Always the Result of Financial Irresponsibility

You may believe that bankruptcy is a sign of financial irresponsibility and that filing would somehow constitute a personal failure. In reality, a significant number of bankruptcies are the result of circumstances completely out of a debtors control. Unexpected illnesses, job loss, poorly performing investments, variable interest rates, overuse of credit, or injury-causing accidents can result in unexpected expenses, an inability to work, or both.

Myth #3: Your Repayment Plan Will Create a Financial Burden

The court determines Chapter 13 payments by looking at a debtors debts, income, and allowable expenses, then sets an amount for you to pay each month that allows you to live, eat, get around, and pay other bills while making payments toward your debts. In addition, should your circumstances change in a way that makes the payment unaffordable, you could ask the court to modify your payment.

Myth #4: You Will Lose Your Home if You File for Chapter 13

Many people actually use Chapter 13 to keep their homes. In Chapter 13, you can take your past-due mortgage payments (often referred to as arrears) and pay them back during the course of your bankruptcy planwhich lasts anywhere from three to five years. As long as you can keep up your mortgage payments during your bankruptcy, you can keep your house. In some cases, filing for bankruptcy actually provides a good opportunity to renegotiate the terms of your mortgage with your lender to lower your payments.

Call the St. Petersburg Bankruptcy Lawyers of Berkowitz & Myer Today for a Free Consultation

Bankruptcy does not need to frighten you. In fact, it can form the first step to a significantly brighter financial future. At Berkowitz & Myer, we will thoroughly review your financial situation during a free initial consultation and let you know whether we believe you could benefit from filing for bankruptcy. To schedule an appointment with a bankruptcy lawyer in St. Petersburg, contact us online or call our office today at (727) 344-0123.

Changed Circumstances in a Chapter 13 Case

Bankruptcy Lawyer St. PetersburgA Chapter 13 bankruptcy case involves a repayment plan during which you make monthly payments to the court for three to five years. The amount you must pay is based on your income and expenses and it is essential to have an attorney who can ensure your payment amount is fair based on your circumstances. Once a payment amount is set, you must continue to make these payments for the duration of the plan in order to qualify for a discharge of your remaining debts at the end of your case.

We all know that financial circumstances can change at a moment’s notice. During your repayment plan, your specific circumstances may change drastically enough that you may not be able to afford to make your payments to the court as initially set. In this situation, an experienced attorney can present a case to the court that your changed circumstances warrant an adjustment to your Chapter 13 payment or even a discharge of your debts without further payments.

Seeking a Modification

The first attempt at relief based on changed circumstances must be to seek a modification of your payment. Your attorney can present your new financial information to the bankruptcy trustee and can negotiate a more manageable payment for you. If they are able to agree on a payment amount you can afford, you may continue your repayment plan and ultimately receive a discharge.

Hardship Discharge

In some cases, it may be impossible to modify a payment so that you can manage it for the remainder of your payment plan. You may be eligible for a discharge based on financial hardship if your attorney can prove the following:

You were not at fault – To be eligible for a hardship discharge, you must demonstrate that your change in circumstances was beyond your control and was not your fault. For example, if you suffered a medical issue that keeps you from working or if you were laid off, your loss of income is beyond your control. On the other hand, if you voluntarily quit your job, this is not a changed circumstance that could qualify you for a hardship discharge.

A permanent change in circumstances – Furthermore, your changed circumstances must be permanent. If you lost your job and have the ability to find a new one, the court will not simply discharge your debt because you have a temporary loss of income. However, if you suffered a permanent disability that prevents you from ever returning to work, you may be eligible for a hardship discharge.

In addition, the court will examine how much of your Chapter 13 repayment plan has been completed before deciding whether to grant a hardship discharge.

Consult a St. Petersburg Bankruptcy Law Firm Regarding Your Situation Today

The bankruptcy attorneys of Berkowitz & Myer will help throughout the duration of your Chapter 13 case, including if you experience changed circumstances during your repayment plan. If you would like to discuss the many ways we can help you for free, please call (727) 344-0123 or write to us using our online contact form today.

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