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. In other words, while your credit score will be immediately affected, bankruptcy will help in the long term. This is your opportunity to completely rebuild.
A bankruptcy filing will show up on your credit report for seven to 10 years. The exact timeframe will depend on which type of bankruptcy you’re filing. There are two different types of bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, you can completely wipe away certain debts — like credit card debt and medical bills — without paying them back. This allows you to start fresh with true financial freedom. In contrast, a Chapter 13 bankruptcy is a debt reorganization plan. Over the course of three to five years, you’ll pay back a small portion of your debts through affordable payments, increasing your overall cash flow.
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 timeframe. 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 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.
Do not be discouraged. There are many resources that can help you to rebuild your credit after a bankruptcy. At Darrell Castle & Associates, a bankruptcy law firm Memphis TN trusts, we want to see you succeed in your life after bankruptcy. That’s why we offer a wonderful 14-week program called “7 Steps to 720” free of charge for our clients. It will teach you valuable information to guide you as you move forward after a bankruptcy, including the following:
- How to properly and sustainably rebuild your credit after a bankruptcy, foreclosure, or short sale
- Why most credit scores are actually misleading
- Which credit cards will damage your credit score
- How to deal with lenders who report inaccurate information
Common Bankruptcy Mistakes
Bankruptcy isn’t nearly as taboo as it was many years ago. Many people who are under financial distress are choosing to file for bankruptcy. In fact, the number of Americans filing for bankruptcy has been steadily rising in the last 50 years. These days, a large number of bankruptcies are filed by individuals rather than businesses.
If you’re in the same boat, struggling with debt and ready to move forward, it’s a good idea to educate yourself about the bankruptcy process first to avoid making costly mistakes. You want to avoid common mistakes and take steps to ensure that the process goes smoothly. This is critical to putting the proceedings behind you as quickly as possible. Our lawyers are here to help you and we offer detailed guidance based on your specific situation.
As a bankruptcy law firm Memphis, TN provides, our lawyers will share some of the most common bankruptcy mistakes you should avoid making.
Hiding Assets
When you’re filing for bankruptcy, you may be asked to list all of your assets and income as part of the process. As a bankruptcy law firm Memphis, TN, has turned to for more than 30 years, we know that some people filing for bankruptcy are afraid of losing some of their assets. It is easy to see why they become tempted to hide them. However, neglecting to mention a bank account or transferring funds to a relative isn’t something you want to do. It’s against the law and may result in your case’s dismissal, fines or even jail time. You could possibly be banned from ever filing again at a future point. If you have done this already, please call a bankruptcy law firm Memphis, TN offers to find out what you should do now.
Purchasing Numerous Items
Some people make the mistake of maxing out their credit cards on frivolous purchases before filing for bankruptcy. They might think it doesn’t matter because they’re going to discharge everything anyway. However, the courts will keep a close eye on your spending habits before you file for bankruptcy. If they find out that you made several large purchases before filing, they likely won’t discharge these items.
Relatedly, it is in your best interest to avoid using your credit accounts while filing for bankruptcy. You do not want to build up additional debt in this process, and if you make large purchases or take significant advances before filing, it may look deceitful.
Procrastinating
As a well-known bankruptcy law firm Memphis, TN respects, our lawyers would like to point out that filing for bankruptcy isn’t a decision you should take lightly. However, you also shouldn’t wait too long to file. The longer you wait to file, the more you will hurt your finances in the long run. If you’re drowning in debt and know that you can’t realistically pay it off, it may be time to file for bankruptcy.
Repaying Family Before Filing
If you borrowed money from family members, it’s understandable that you want to pay them back as soon as possible. However, it isn’t a good idea to pay them back before filing for bankruptcy. The trustee may see the payment as preferential and not allow it. Your family may even be required to pay back the money to the trustee.
Not Call a Bankruptcy Law Firm in Memphis, TN
When you’re having financial difficulties, you might be tempted to forgo hiring a bankruptcy lawyer in Memphis and handle the matter yourself. After all, it’s just another cost you have to deal with. Many people assume, incorrectly, that filing on their own will save them money. However, not having a bankruptcy law firm Memphis, TN individuals can rely on by your side could cost you even more in the long run. Bankruptcy law is very complicated and it’s easy for the average person to make mistakes. An experienced bankruptcy lawyer will know the ins and outs of bankruptcy law and will guide you the right way. He or she will protect your legal rights and prevent you from making mistakes that could cost you. If you put yourself in trusted hands, the complicated process of filing for bankruptcy will become simple and painless. Since each case looks so different, only an experienced lawyer can make recommendations tailored to your specific needs, determining which type of bankruptcy — a Chapter 7 or a Chapter 13 — is right for you.
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. 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. We have helped thousands of clients get back on track, and it’s been a privilege to see so many of them successfully rebuild.
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