Chapter 7 and Chapter 13 bankruptcy will stay on your credit report for the same amount of time; about ten years. Although they both have the same effect on your credit score, a particular creditor reviewing your report to decide whether to lend you money might view one chapter more favorably than the other. In particular, a creditor might be more willing to lend to you if you filed for Chapter 13 rather than Chapter 7.
Bankruptcy is not a simple matter with minor consequences. Rather, it may involve complex dealings with bankruptcy court and creditors. It could also have a major impact on your daily life. Filing for bankruptcy can affect your credit and property. Naturally, this is a stressful situation that you never envision yourself being in. The situation can be made easier by making the proper choices such as hiring a competent bankruptcy attorney and collecting and organizing your financial data.
When faced with credit problems and potential bankruptcy, hiring an attorney might be the answer to getting your financial life back on track. If you’re planning to contact an attorney, use the checklist below to gather the documents that the attorney will need to see to provide you with the best advice and representation. Oftentimes, people do not know where to start and what to do. This checklist will be a useful proactive tool so you can begin collecting and organizing the proper paperwork.
Your financial records are some of the first documents you should collect. These records will help determine which type of bankruptcy is best suited for you. For example, your financial documents can show you have regular income, meaning your best fit may be Chapter 13 bankruptcy. This may have huge implications because Chapter 13 will allow you to keep possession of your property and pay your debts over time.
- Most recent bank statements
- Most recent bills from every creditor
- Most recent payment coupons for vehicles (lease or purchase), real estate, and student loans
- Bills or invoices for purchases in the last year
Any legal history or pending litigation involving you is information you’ll want to disclose to your attorney. Previous judgments against you show debts that will factor in to determining which bankruptcy is right according to your financial situation. In addition, any pending litigation or current court order will determine how much you can afford to pay your creditors at this time.
- Files from previous litigation, including especially any judgments that have been entered against you
- Files from previous attorneys
- Any divorce decree or other court order that requires you to pay child support or maintenance
The following list below is a combination of assets you own and verification of your income. A proper, thorough organization of your assets is extremely important to show you have a set income level. This income determination can be essential in proving you can repay your debts over a period of time or in proving a lack of income.
- Canceled Checks for any expense you cannot otherwise document
- ALL your correspondence with or regarding creditors, especially threat letter
- ALL insurance policies
- Tax returns for the last three years
- Vehicle titles
- Your lease or mortgage
- Any promissory notes you have signed
- Other documents relating to debts you owe other people
- Any proof that anyone owes you money
- Any lawsuits with which you have been served
Firebaugh & Andrews will make sure all your questions are answered, call today for a free consultation 734-722-2999
Bankruptcy Myths #1: If I file for bankruptcy, I will lose everything.
This is a common misconception that keeps people who really should file for bankruptcy from doing it. Federal and Michigan laws provide exemptions that can protect (up to a certain value) assets, such as your house, your car, money in qualified retirement plans, household goods and clothing. For most people, they’ll lose nothing in the bankruptcy process!
Bankruptcy Myths #2: If I file for bankruptcy, I will never again be able to buy a house or a car.
Many of our clients are able to obtain new cars after completing the bankruptcy process. However, each lender varies in their business practices so you may need to shop around. Lenders take other factors into account as well, such as current employment, current income, and credit history.
To purchase a new home it usually takes a bit longer. It typically takes about two years to get a house after you file for bankruptcy.
Bankruptcy Myths #3: If you’re married, both spouses have to file for bankruptcy.
If one spouse has a significant amount of debt in their name only, it may make sense for only one spouse to file. However, if there are joint debts then it may be prudent for both spouses to file. If there are joint debts and only one spouse files then the creditor may still attempt to collect the debt from the non-filing spouse.
Bankruptcy Myths #4: I won’t ever be able to get credit after my bankruptcy.
Many of our clients are shocked by how quickly they’ll start getting credit card offers in the mail again. By opening a new credit card and habitually making on-time payments your credit score will quickly improve beyond pre-filing levels. Please see our credit repair kit to view other ways to increase your credit score. We help our clients increase their credit scores through bankruptcy. It’s also important to monitor your credit score.
Bankruptcy Myths #5: People who file bankruptcy are financially irresponsible.
There are a multitude of reasons that people need to file for bankruptcy, many of which are out of their control. Often it is because people run into very serious personal problems such as a job loss, serious medical issues, or a divorce. Unemployment, the cost of running two households following divorce, or the cost of medical care have all driven well-intentioned Americans into bankruptcy. It’s financially irresponsible to avoid your creditors, ignore your bills and drive yourself further into debt. Millions of well-intentioned Americans have filed for bankruptcy and come out stronger and more successful!
Bankruptcy Myths #6: You can’t get rid of back taxes in Bankruptcy.
Certain federal, state and local taxes can be discharged under the bankruptcy laws. There are several qualifications that must be met, but once these are met, the taxes may be discharged.
Bankruptcy Myths #7: It’s really hard to file for bankruptcy
Although there were new laws enacted in 2005, the new laws were drafted to prevent fraud and bankruptcy abuse.
Bankruptcy Myths #8: Everyone will know you have filed for bankruptcy.
It is unlikely anyone will know that you have filed for bankruptcy unless you tell them. While bankruptcy is a matter of public record, someone would have to specifically track down the information using your personal information in order to find out if you filed for bankruptcy.
Bankruptcy Myths #9: You can’t afford to hire an attorney.
At Firebaugh & Andrews , initial consultations are FREE! Money is never a reason we turn clients away. We pride ourselves on our flexible payment plan options which can be customized to your unique circumstances. In our experience, the worst thing a client can do is obtain legal advice from the internet, co-workers, family or friends.
Bankruptcy Myths #10: There is a minimum amount of debt required to file for bankruptcy.
There is no minimum amount of debt required to file for bankruptcy. Every situation is unique.
Call Firebaugh & Andrews today for your free consultation 734-722-2999