Chapter 7 vs. Chapter 11 vs. Chapter 13
Before you decide on credit repair in Reno 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 Reno 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 Reno use a trusted credit repair companyCredit counseling is the most complete solution, using various resources to help a consumer solve their money problems. It also requires the most work from the consumer and does not promise quick relief. Tools include budgeting, educational programs, counselors and a personalized plan. Credit counseling may, but does not always, lead to a Debt Management Plan where a consumer pays money into an account and the agency pays their debts from that account.
Consumers can find a list of government approved credit-counseling agencies in the United States at www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111.
Debt relief or settlement companies say they can reach out to one’s creditors and try to get them to lower a consumer’s balance, interest rates or fees so they pay less. Consumers can also try to do this themselves to avoid the fees that a company like this will charge them.
Debt consolidation companies offer consumers loans to pay off one’s debts in one lump sum. The low interest rates are tempting, but once a consumer goes through the application process they may find more fees. They may also be able to consolidate and pay off their debt through a second mortgage or home equity line of credit, but be very careful. As consumers are putting their home up as collateral, if they cannot make their payments, they could lose it.
Credit repair companies promise to clean up one’s credit report for a fee, but the chances they can do anything the consumer could not do on their own are slim. Consumers have the right to correct inaccurate information in their file, but nobody can remove accurate negative information. Only time and steady payments will repair one’s credit.
There are promises and then there are factsDid you know that more than 500,000 Americans declare bankruptcy each year? While unfortunate, it’s helpful to know that you are not alone when it comes to dealing with a bankruptcy. Even after your bankruptcy is discharged, there is the aftermath to contend with as well; namely, repairing your credit.
With 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.