Bankruptcy Law Firm Memphis, TN
As each attorney from our bankruptcy law firm can attest, one of the things that people who file for bankruptcy worry about is how their credit scores will be affected. In many cases, this concern holds them back from moving forward with the process itself. And although it is true that bankruptcy does impact your credit score, late payments and no payments also have a significant impact on your credit rating, as well.
At Darrell Castle & Associates, our experience is that by the time clients finally reach out to find out how filing for bankruptcy can help them, they are usually in a dire financial situation, with multiple late or missed payments. Many of them have already had charge-off accounts and may even be facing foreclosure, vehicle repossession, or liens. All of these things affect your credit score, lowering it, and making it impossible to obtain loans and other lines of credit.
A bankruptcy filing will show up on your credit report for seven to 10 years. A Chapter 13 bankruptcy will stay on your credit report for seven years and a Chapter 7 bankruptcy will stay in your credit report for 10 years. However, that does not mean your bankruptcy filing will have the same impact on your credit score during this time frame. During this time, as long as you pay your bills on time, the impact of the bankruptcy will lessen over time and you could quickly increase your credit score. Starting with a clean financial state will enable you to not only rebuild your credit, but will also enable you to begin saving for your future, like starting a retirement account.
Following the completion of bankruptcy, a credit score will usually drop anywhere from 150 to 250 points, however, many of the clients we help at our bankruptcy law firm find that they can obtain a vehicle loan shortly after filing bankruptcy, keeping in mind that the interest rates will be higher, based on a low credit score. Our clients have also been able to obtain a mortgage through the Federal Housing Administration (FHA). An FHA loan is specifically for borrowers who have moderate or low incomes and are unable to make a large payment on a home. The loans are issued by lenders who are qualified through the government and are insured by the FHA.
Chapter 7 Bankruptcy and 341 Hearing
When you file a petition for Chapter 7 bankruptcy, you are disclosing personal and financial information to the bankruptcy court. In order to file for bankruptcy, the court needs to be aware of your debts, property, income, and general state of your financial affairs. In turn, the bankruptcy court will appoint a bankruptcy trustee to oversee and administer your case. The trustee will essentially review your petition and verify that what you submitted was true and accurate using independent sources of verification.
In Chapter 7 bankruptcy, the trustee may cancel some or all of your debts. Additionally, the trustee may also sell any nonexempt liquid assets that you may have in order to repay some of your creditors. Much of the investigation performed by the trustee takes place at the meeting of creditors, also known as a “341 hearing.”
The 341 Hearing
Prior to the 341 hearing, the bankruptcy trustee will have reviewed your general financial status, including your debts, income, expenses, prior tax returns, and any pay stubs you may have.
In Chapter 7 bankruptcy proceedings, the 341 hearing will typically be set anywhere from 21 to 40 days after you file your petition for bankruptcy. The bankruptcy trustee will conduct the 341 hearing and it will usually take place in a room at a federal court building.
Items to Bring to 341 Hearing
When you are scheduled to be at the 341 hearing, you are required to bring certain items with you for the hearing to proceed. The most important items you need are photo identification and proof of your Social Security number. If you fail to bring either, the hearing will not proceed and will need to be rescheduled. Additionally, the trustee will inform you ahead of time if he or she has any special requirements regarding items you must bring to the meeting.
These special items may include:
· Copies of mortgage documents
· Automobile titles or liens
· Deeds to any real property
· Bank statements
· State and federal tax returns
· Pay stubs
As with the important items identified above, if you do not bring the items requested by the bankruptcy trustee, the hearing will not proceed, and it will have to be rescheduled.
Substance of the 341 Hearing
Generally, you will sit at a table with your attorney, if you retained one, and the bankruptcy trustee will ask you questions about your financial status and any financial documents you submitted. Your creditors may also ask you questions if they or their attorneys are present. Essentially, the 341 hearing provides the trustee with insight into your paperwork, values of any assets or property and any information pertaining to past financial transactions.
Once the trustee and creditors finish asking you questions the meeting will be concluded and another 341 hearing will only be scheduled if the trustee needs more information, you were missing any documents or if you need to amend your paperwork.
Find Out How Our Memphis, TN Bankruptcy Law Firm Can Help
If you are struggling financially and see no way out, it may be time to sit down with a bankruptcy attorney to find out what legal options you may have. At Darrell Castle & Associates has built a solid reputation as a bankruptcy law firm Memphis, TN clients recommend. We will evaluate your situation and determine if you qualify for bankruptcy and if so, which type would work the best for your circumstance, Chapter 7 or Chapter 13. Although you may consider filing for bankruptcy on your own, it is critical to know that this process can be complicated and making an error can cause the court to dismiss your filing.