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.

Does Chapter 13 Bankruptcy Stop Wage Garnishment?

If you are facing wage garnishment, you understand how difficult it can be to make ends meet while losing a portion of your paycheck to a creditor. It can also be very embarrassing to have your employer approached by a creditor to garnish your wages. Wage garnishment typically occurs when a creditor gets an order against you in court that permits the creditor to go directly to your employer and require your employer to withhold a portion of your pay, which ultimately gets turned over to the creditor. This makes getting out of debt that much more difficult. Fortunately, Chapter 13 bankruptcy may be able to help.

Many people use Chapter 13 bankruptcy as a means to stop wage garnishment and set up a plan to feasibly tackle the outstanding debt. Chapter 13 bankruptcy can also be used after a creditor has obtained a judgment against you but before it approaches your employer to garnish your wages. To learn more, call our office today at (727) 344-0123 to speak with a St. Petersburg Chapter 13 bankruptcy lawyer.

The Immediate Effect of Filing Chapter 13 Bankruptcy on Wage Garnishment

Immediately upon filing a Chapter 13 bankruptcy, an automatic stay is put in place that prevents any creditors or debt collectors from seeking repayment from you until the bankruptcy court lifts the stay. As a result, under the automatic stay, wage garnishment is stopped. Your attorney can provide a copy of your Chapter 13 bankruptcy petition to your employer to notify your employer that it should no longer be withholding any of your pay.

 

The Long-Term Effect of Filing Chapter 13 Bankruptcy on Wage Garnishment

In the long-term, the underlying debt that is causing the wage garnishment can be addressed in the Chapter 13 bankruptcy and repaid under terms that are more advantageous to you. Instead of losing a portion of your pay automatically, you can strategically address debt and pay it according to the Chapter 13 bankruptcy plan. Your attorney will propose a Chapter 13 bankruptcy plan that is suitable to your income so that you are not overburdened with debt payments.

Some Wage Garnishment is Not Stopped by the Automatic Stay

Unfortunately, not all types of wage garnishment can be stopped with a Chapter 13 bankruptcy. Wage garnishment due to default on Federal student loans, missed child support and alimony payments, and unpaid income tax debt cannot be stayed by filing a Chapter 13 bankruptcy. It is crucial to speak with a bankruptcy attorney at Berkowitz & Myer to determine whether your particular wage garnishment can be addressed with a Chapter 13 bankruptcy.

Call Us Today to Speak with a St. Petersburg Chapter 13 Attorney

Wage garnishment may be preventing you from catching up on your debt obligations, and if so, the attorneys at Berkowitz & Myer can assist you in filing a Chapter 13 bankruptcy to stop that wage garnishment and implement a plan to repay your debt on terms that are most suitable to you. Call the St. Petersburg law firm of Berkowitz & Myer today at (727) 344-0123 or contact us online to see if you can utilize Chapter 13 bankruptcy to stop your wage garnishment and get your finances back on track.

Chapter 13 Bankruptcy vs. Debt Relief Companies

If you are in the unfortunate position of finding your debt getting out of hand, you may find yourself considering two entirely different options: bankruptcy and debt settlement. While on the surface debt settlement through a debt relief company may sound great, it is fraught with hidden perils that often remain unknown to consumers until it is too late. For this reason, you should always consult with a St. Petersburg debt relief attorney before engaging a debt relief company to help you manage your debts.

The Promise and Pitfalls of Debt Settlement

There are many companies out there that offer debt settlement. These companies, known as debt relief companies, often operate in a legal gray area. The debt relief companies make big promises, such as settling all of your debt for a fraction of the amount owed. While this seems great on the surface, there is more to it than simply paying and having the debt canceled. The debt relief company will ask you to make payments to it on a regular basis, and then they will use those funds to negotiate a settlement with your creditors and they will keep a portion of it as their fee. The debt relief company may encourage you to fall behind on your payments so that the creditor will consider you for a settlement. This is harmful to your credit score and credit report, as defaults can stay on your credit report for up to seven years. In the end, you may default on your debt and find that the creditor is unwilling to negotiate a settlement with you. Instead, the creditor may seek a court judgment permitting it to garnish your wages or place a lien on your property. Even if the debt relief company is successful in negotiating a settlement, your credit report will still reflect a charge-off or settlement for up to seven years.

A Better Alternative to Debt Settlement

A Chapter 13 bankruptcy is a legal remedy that can help you get your finances back on track. A Chapter 13 bankruptcy plan does not operate as a debt settlement. Instead, it is a repayment plan that allows you to make affordable payments to creditors over a period of three to five years. Common debts that can be included in a Chapter 13 plan include the following:

  • Credit card bills
  • Medical debt
  • Car loans
  • Personal loans
  • Utility bills
  • Past-due rent

This plan is proposed by you and your attorney, and if successful, will allow you to head off your debt before it spirals out of control. You can satisfy your debts without the risk of wage garnishment or property liens. Furthermore, depending on the amount of debt, a Chapter 13 bankruptcy is often a more economical option as all of your debt is taken care of in one go rather than piecemeal. Chapter 13 bankruptcy is also overseen by a court of law, so you can rest assured that attorneys offering Chapter 13 bankruptcy services are well-regulated, which cannot be said about debt relief companies.

Call the St. Petersburg firm of Berkowitz & Myer Today to Discuss Chapter 13 Bankruptcy

A Chapter 13 bankruptcy may very well be a better option for you than debt settlement if you are facing mounting debt. The attorneys at Berkowitz & Myer can advise you on all of your options and can determine whether a Chapter 13 bankruptcy is the right fit for you and your needs. Call the St. Petersburg law firm of Berkowitz & Myer today at (727) 344-0123 or contact us online to speak with an attorney about the solution to your debt.

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) 367-1080 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) 367-1080 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) 367-1080 or send us an email through our online content form.
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