From an accumulation of credit card debt or an excessive amount of medical bills to the loss of income after an injury or termination of employment, there are many reasons why someone would need to file bankruptcy. Unfortunately, many people believe filing bankruptcy is a form of failure. In reality, it is actually more common than most people think. If you are currently in the process of filing bankruptcy, you may be wondering what happens afterwards. Although your financial well-being should improve, a few issues may occur after filing. This guide and your attorney will help you understand what issues may arise and how to correct them after filing.
Creditors Are Still Calling/Sending Letters
In most cases, the harassing phone calls and letters are a big reason why you considered bankruptcy in the first place. Therefore, once you file, these phone calls and letter should come to a halt.
As soon as you do file bankruptcy, the creditors will receive notification. This allows them to understand what is going on with your finances and how you will proceed with their creditors in the future. Of course, if you are filing chapter 7, the debts will be discharged. However, if you are filing chapter 13, you will still be responsible for paying some of these debts.
No matter what form of bankruptcy you have filed, the creditors should not be attempting to collect the debt by contacting you directly. If you are still receiving phone calls and letters, it may be due to a clerical issue that is affecting their record-keeping. Your attorney can help address these harassing phone calls and debt collection attempts as long as the credit is listed on your bankruptcy filing.
In the meantime, remain calm when you do speak with a collection agent/creditor. Notify them that you have filed bankruptcy and that they should have this information on record. You can also provide them with your attorney's contact information to confirm, if necessary.
Judgment Is Still Showing Up on Record
A judgment may be placed against you for a debt you are unable to pay. When you file bankruptcy, the debt will be discharged, as long as the debt is included in your bankruptcy filing.
While the debt may be discharged and you are released from paying the judgment, the judgment will still remain on public record, but your attorney can help.
It is also important to note that if a judgment lien was placed on your property, your attorney must file a motion with the courts to have it removed. Every state has their own stipulations on whether a judgment or property lien from a judgment can be removed, so it is best to consult your attorney if you are still dealing with this problem after filing bankruptcy.
You Are Struggling to Improve your Credit
No matter what type you file, bankruptcy will negatively affect your credit. On average, you can expect a 160 to 220 drop in your credit score once the bankruptcy is filed. Of course, this drop in your credit may be in addition to the decrease in the score that occurs with missing payments or making late payments over a period of time.
Most experts state a bankruptcy will remain on your credit report for between 7 and 10 years depending on the type of bankruptcy. Thankfully, you can start rebuilding your credit immediately after filing.
Consider opening up a secured credit card through your personal bank or another major bank. The bank will require that you put down a deposit, which acts as your credit limit. You should make small purchases and paying them off immediately to start rebuilding your credit.
Also, design and stick with a budget that ensures you will be able to pay your basic living expenses and your new secured credit card without any risk of being late. If you are filing the repayment plan form of bankruptcy, which is chapter 13, you will have professional assistance setting up a budget that works.
Contact a bankruptcy attorney like Charles J Schneider PC for more information.
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