Chapter 7 vs. Chapter 11 vs. Chapter 13
Before you decide on credit repair in Columbus you may first need to decide if you should file for bankruptcy in CR or not ? Chapter 7 is the fastest. In many cases, this type of bankruptcy case can be completed in a few months. Chapter 13 cases, on the other hand, cannot exceed five years but usually last about that long. There is no time limit on Chapter 11 plans. It is an essential strategy to repair credit.
Both Chapter 13 and Chapter 11 may allow you to keep certain assets you may lose under Chapter 7. For example, if you own a recreational boat without debt, you may have to surrender that in a straight bankruptcy, but you may be able to keep it if you pay the trustee the value of the boat in your Chapter 13 plan.
Both Chapter 11 and Chapter 13 may offer more help with Columbus and mortgages. In Chapter 7, if you are behind on these payments and can’t catch up, you may wind up losing that property. Under Chapter 13, you may be able to catch up on those past due amounts over time. In some situations, homeowners can wipe out a second mortgage on an underwater home or negotiate a modification of their primary mortgage by filing for this type of bankruptcy. Chapter 11 may be especially helpful to small business owners or real estate investors with multiple properties by allowing them to restructure their debts or catch up on payments that are behind. Credit counseling can help with this.
Chapter 7 is generally cheaper than Chapters 13 or 11. With the former, you must pay your attorney upfront. With the latter, you may be able to pay part of your fee over time as part of your plan. Chapter 11 is generally the most expensive due to the higher filing fees and cost of the legal work involved.
In Columbus use a trusted credit repair company4 Ways Bankruptcy Can Help You
While filing for bankruptcy may not be the ideal, there are ways doing so can help you.
Eliminate certain debts. Bankruptcy may allow you to wipe out unsecured debts, and some taxes. Student loans typically cannot be discharged, except in cases of extreme hardship. Secured debts, like car loans or mortgages (not including certain underwater mortgages) are not eliminated, however, past due payments may be restructured to let the borrower catch up.
Stop aggressive debt collectors. When you file, you become protected by the “automatic stay,” which stops most collection actions against you. This can give you breathing room while you get back on your feet.
Avoid taxes on canceled debt. If you don’t pay back some of your debt, the creditor may be required to send you a 1099-C reporting this “cancelled” debt as income. This can result in a tax headache for you in future years. But debts discharged in bankruptcy are not considered taxable income, so it’s one less thing you have to worry about.
Allow you to keep protected property. Most of the time, savings in your qualified retirement plans are safe from creditors. In addition, in every state there is a list of exemptions — property you get to keep. There are also federal exemptions you may be able to choose in certain states..
Bankruptcy is not the end of the worldWith so many people experiencing bankruptcy and so much financial data going through the credit bureaus, the chance for error is great. That’s why it’s imperative that you review all of your credit report information for accuracy, particularly the data surrounding the specifics of your bankruptcy. We’ll walk you through why it works and what to do so you can start repairing your credit today, even with a bankruptcy in your past.
How does a bankruptcy affect your credit score?,
Having a bankruptcy on your credit report can be devastating to your credit scores. According to FICO, for a person with a credit score of 680, a bankruptcy on your credit report will lower your score by 130-150 points. For a person with a score of 780, a bankruptcy will cost you 220-240 points. That one event immediately drops you several categories lower and impacts your ability to access credit, and yes, the higher your initial credit score is, the more it falls.
You might not be eligible for future loans or credit cards, and if you are, you’ll most likely end up paying much higher interest rates. Not only that, the amount you can borrow will probably become limited. While filing for bankruptcy may be the best financial decision at this point in your life, it’s still important to understand how and why it affects your credit.