Can I Rebuild My Credit after Bankruptcy? The Answer is Yes!
Usually within a year of filing bankruptcy, your credit record will improve substantially. You will become a better credit risk than you were prior to the bankruptcy. For many, a bankruptcy filing can be the first step toward gaining better credit and financial freedom.
Once you complete your case and your bankruptcy is discharged all of your old debt will be eliminated. You will have a Fresh Start! Most creditors will see this fresh start and lack of other debt as a positive. One Caveat—creditors now want evidence that you can handle credit going forward. For this reason, after you file bankruptcy it will be extremely important that you take some specific steps to begin to improve your credit.
Without the benefit of bankruptcy, bad credit records such as delinquencies, too much outstanding credit, slow pays, etc are all negative marks that will remain on your credit record for 10 years. In most cases, although the creditor may not be actively pursuing your debt, the debt remains valid and open to collection through wage garnishment or bank account seizure. Bankruptcy solves this problem because it eliminates or discharges your debt. After bankruptcy, your financial situation will be far better since you will no longer be shuffling funds in an attempt to cover all the bills. After bankruptcy, our clients get super excited to create a new budget… and that is a budget that includes putting money into a savings account!
After completing your bankruptcy your credit and your life will be on the road to improvement. Initially, the bankruptcy will be a hit on your credit score but in the long run, the notation “discharged in bankruptcy” is much better than having your accounts reported as delinquent by your creditors. We recommend that soon after your bankruptcy discharge you get a copy of your credit report. Review this report carefully, check to make sure that the debts you included in your bankruptcy are reported to be DISCHARGED with a ZERO balance. Dispute any accounts that have not been updated.
Depending on when you file Chapter 7 or 13, a bankruptcy will stay on your credit for 7-10 years. Despite this, you will soon have the opportunity to rebuild your credit. Some companies cater to those who have a bankruptcy by offering secured credit, low credit lines and high interest. If you use this credit wisely and make all your payments on time you will prove that you have become a good credit risk.
What Factors Will Affect My Ability to get Credit?
Four Factors are considered by a lender:
Income Job History Credit Score Debt-to-Income Ratio
After bankruptcy we encourage our clients to do the following:
Periodically monitor your credit record and dispute errors.
Make “on time”payments.
Mantain a stable job history.
Deliberately and thoughtfully apply for new credit. Many with credit bruises can get secured credit cards, gas or retail cards. If you get turned down STOP, wait 6 months and try again.
Use no more than 10-30% of your available credit.
Are You Ready for a New Start? We Want to Help!
The lawyers of Keegan & Co. Attorneys have over 50 years combined experience helping people just like you resolve overwhelming debt issues. Our attorneys have handled several thousand bankruptcy cases from the simple to the most complex. In all likelihood, we’ve seen your situation or problems dozens of times before. We can almost always help, even if it’s just advice on how to avoid bankruptcy.
The Covid19 crises and the need for social distancing will not affect your ability to file for bankruptcy. The bankruptcy court is accepting and hearing cases, our clients have not experienced any delays getting relief from debt. If you are unable to meet in person, our attorneys are happy to schedule a consultation over the telephone.
People are surprised to learn just how quick and easy the bankruptcy process is! You need to provide us with certain documents and it is required that you take two short online credit counseling classes. Our attorneys handle the rest! You and your attorney generally are required to appear for just one court hearing.
Ready to Learn how Bankruptcy Can Help You?
Our consultations are free and at Keegan & Co Attorneys your consultation will always be with an experienced attorney, it will never be with a paralegal or secretary. Call 513-752-3900 to schedule your personal consultation. We look forward to meeting you!
“Our practice is focused on bankruptcy in Clermont County and Cincinnati.
COVID-19 is affecting millions of people financially
The CARES act has addressed certain bankruptcy issues directly.
If you’re currently in a chapter 13 case your repayment plan can be extended from 5 to 7 years. If you’re filing a chapter 13 within the next year, in the appropriate circumstances your plan can be up to seven years.
We can stop the filing or the continuing of any foreclosure action through a chapter 13 case.
If you are currently in a chapter 13 and have been laid off we can amend your plan to give you more time to complete your case while we suspend your payments in the meantime.
The stimulus check that you may have received is exempt from by the bankruptcy court and yours to keep.
Contact us to see if we can help you. Call 513-752-3900 for your free consultation with one of our experienced attorneys.”
We are bankruptcy attorneys located in Eastgate, Ohio. Our main focus of practice is Chapter 7 and Chapter 13 bankruptcy filings.
Many people assume that if their income is relatively high, they cannot file for Chapter 7 bankruptcy. Usually this assumption is incorrect. It is not by any means unusual for a high-income debtor to file under Chapter 7. In reality, high-income Chapter 7 bankruptcies are filed everyday.
What constitutes as high income is a matter of perspective and depends on many factors, such as where you live, your living expenses, the size of your family, etc. (A salary of $80,000.00 for a family in rural Ohio goes a lot further than the same earnings in the city center of Columbus or Cincinnati). With that being said, in the language of bankruptcy attorneys a “high-income debtor” is a debtor with earnings above the state median income for the debtor’s family size.
The Ohio state median income per family size (determined by census figures) as of the date of this post is as follows
|Individual||Family of 2||Family of 3||Family of 4|
*For each additional family member over four, add $8,100.
WHY IS THE STATE MEDIAN IMPORTANT?
Whether your income is above or below the Ohio state median income determines if you will be able to discharge all or most of your debts in Chapter 7, or will you be required to pay back at least a portion of your debt under Chapter 13. If your average gross earning for the six months before filing for bankruptcy is at or below the state median for your family size, you may file under Chapter 7 (assuming that you meet the other requirements). Simple!
On the other hand, if your average gross earnings for the six months before filing is over the median, you will have to takes a “means test” to determine if you qualify for Chapter 7. This means test considers your income minus certain allowable expenses. Frequently the results allow a debtor with substantial earnings but high expenses to file under Chapter 7.
ARE YOU REALLY A HIGH-INCOME DEBTOR?
Before jumping to meet the means test, debtors need to determine if they are actually high-income debtors for the purposes of the test. We often have clients with seemingly high earnings who are surprised that they fall below the state median. Many of these clients have not considered the size of their families. However, one of the most important factors in determining whether or not you are a high-income debtor is family size. For example, a family of four making $85,000 would have earnings well above the state median of $77,500 for their family size. But what if that family making $85,000 includes six members? Because the median state income medical for a family of six is $93,700, the debtors do not need to take the means test.
Even if the debtor is above the state median, it is often by much less than the debtor presumed. The closer your overall earnings are to the state median, the easier it is to pass the means test.
WHAT TYPE OF INCOME?
If you appear to be over the median, you may still be able to avoid the means test. Depending on what type of earnings you have. Not all sources of money count as income for calculating gross earnings. For example, under the Bankruptcy Code certain income, primarily social security, is excluded from your gross income for the purposes of the means test. This exclusion will often bring a debtor’s gross earnings below the state median, thus avoiding the means test. In addition, because the bankruptcy code focuses on “regular income”, some irregular earnings may not count as “gross income”.
CAN I PASS THE TEST?
Finally, even if you must take the means test, it is still quite possible that you will qualify for Chapter 7. Very often, high-income debtors have high allowable expenses, including mortgage payments, vehicle payments, etc., that will offset their earnings. Although the means test is complex and must be handled carefully, it is not at all unusual for high-income debtors to pass the test. However, failing to list income of any kind can lead to unpleasant consequences. Attention to detail is the name of the game?
We have spent most of this blog discussing the initial qualification for Chapter 7. However, it is important to note that even if you pass or avoid the means test, you do not automatically get to file under Chapter 7. You must meet all other requirements, including a showing that after expenses, you have no significant disposable income to pay your creditors. In addition, there may be a reason for choosing Chapter 13, such as saving a house from foreclosure or a car from repossession. In some cases, a non-bankruptcy solution such as debt negotiation may be available.
For more information check out our website at https://keegancolpa.com.
Contact our Eastgate, Ohio bankruptcy attorney today for your free consultation to see if you can qualify for a Chapter 7 bankruptcy.
Address: 4440 Gleneste-Withamsville Rd. Cincinnati, OH 45245
Phone: (513) 752-3900
Address: 6730 Roosevelt Ave #406, Middletown, OH 45005
Phone: (513) 422-2994
Ohio Bankruptcy Attorney
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