Your Credit And Filing Bankruptcy In Georgia
One of the greatest lies that has been perpetrated on the American public is the idea that your credit will be forever ruined once you file for bankruptcy. This is completely untrue. While a bankruptcy can remain on your credit report for seven to 10 years, it does not mean that you will never be able to obtain credit again.
At the law firm of Claeys, McElroy-Magruder & Kitchens, we provide consumer bankruptcy and debt relief services to clients throughout the greater Augusta, Statesboro and Dublin areas. Our lawyers’ dedicated focus on bankruptcy law and complete understanding of the law allow us to give you honest and accurate answers to the questions that could be keeping you from financial freedom.
What Really Happens With Your Credit Following A Bankruptcy
Once you receive your discharge, all of the debts included in your bankruptcy are completely eliminated. This creates a much more attractive debt-to-income ratio for creditors. You could begin receiving offers for credit in as little as six months. Initially, the offers you receive may be for secured credit or have certain conditions attached to them. These can be very valuable tools for beginning the process of rebuilding your credit. In addition, the higher your credit score is when you file for bankruptcy, the higher it will be when you come out of bankruptcy.
Be mindful of which offers you accept and how much credit you take on. Look closely at the terms of each offer and choose the ones that provide the most benefit to you. Over time, your credit score will begin to recover, and you will eventually become eligible for traditional lending for home and auto loans.
Who Should Consider Bankruptcy?
Many people who are facing financial difficulty think that bankruptcy is only for people who are flat broke or have gotten themselves into some sort of trouble. This is a strong misconception about bankruptcy that keeps many of the people who could realize the greatest amount of benefit from even considering it as an option.
At the law firm of Claeys, McElroy-Magruder & Kitchens, our Augusta lawyers have helped people from all walks of life file for bankruptcy, including executives, lawyers, doctors, real estate agents, laborers, office workers and recent college graduates. In our experience, there is no single type of person who stands out as being a better candidate for bankruptcy than another. Who should consider bankruptcy? Anyone who is struggling financially.
How Do I Know If I Am A Good Candidate For Bankruptcy?
There can be a number of warning signs to indicate financial difficulty. You don’t have to wait until you start getting collection calls to seek relief through bankruptcy. If you are struggling to keep up with your monthly bills, and your income seems to cover little more than your monthly bills, it could be time to learn more about your debt relief options.
The following are some common signs that you may benefit from bankruptcy:
- You rely on credit to bridge the gap between your income and expenses.
- Your minimum monthly credit card payments don’t do anything to reduce the principal balance.
- You have suffered a substantial loss in income or become unemployed.
- You have received a large medical bill that is interfering with your ability to pay other bills.
- Your creditors are threatening to sue you in order to collect the money you owe.
- You are behind on your mortgage payments and may be facing foreclosure.
- Your auto lender is threatening to repossess your car because of missed payments.
The Georgia Bankruptcy Means Test
The Georgia bankruptcy means test is one of the primary criteria used to determine whether a person is eligible to file for bankruptcy under Chapter 7. The means test is essentially a comparison of your income level against other Georgia wage earners. People who are not eligible to file under Chapter 7 can still seek protection under Chapter 13.
The dedicated bankruptcy attorneys at the law firm of Claeys, McElroy-Magruder & Kitchens represent clients throughout the greater Augusta area in all aspects of consumer bankruptcy. We understand how difficult it can be to experience financial hardship and to have to take a “test” to see if you qualify for relief. We walk you through the entire process and see your case through to its conclusion.
Understanding How The Means Test Works
If your income level is higher than the average of other Georgia wage earners, you will need to take a means test. It starts with your monthly income and provides for deductions of all allowable expenses according to the bankruptcy code. A detailed formula then analyzes your income figures to determine your eligibility for Chapter 7 bankruptcy.
The process involved with the means test is very detailed. We understand all the deductions that are available and how to maximize them in an effort to give you the best chance of eligibility. If the test results show that you are not eligible for Chapter 7, we may be able to help you seek adjustments to the income figure if we can show special circumstances that impact your income or deductions.
Tax time often renews an interest in saving money and paying off debts
As Americans wrap up last year’s paperwork to submit to their accountants or prepare their own tax returns, many regret financial decisions – or omissions – they made in 2014. Usually, people wish they had set aside more savings. However, many struggle to meet their monthly obligations and, with the sluggish economy and little hope for a quick recovery, setting aside money from each paycheck can seem impossible.
Make small changes
As difficult as it may seem, a few small changes can make a world of difference for your financial future. If you want to get your debt load under control, consider trying the following:
Pay for everything with cash, not credit: You are less likely to spend money you do not have.
Pay off credit cards: Concentrate on paying off one credit card at a time and remember that minimum monthly payments will not do the trick.
Increase savings: Set up an automatic savings plan from your paycheck. Even a few dollars a week can add up over time.
Start by making one change at a time so you are more likely to succeed. After a few months of achieving one goal, start another.
Avoid tempting pitfalls
If you find yourself in a financial bind, it is often easy to fall prey to a solution that might appear to be a quick fix but which can hurt you in the long run.
As employed individuals try to forestall financial difficulties, they may turn to their IRAs, 401(k) plans or other retirement savings accounts to help pay their bills during tight times. However, this is like taking money away from your future self; if you cannot cover your monthly bills while you are collecting a paycheck, think of how much more difficult it will be to pay those same bills once you are retired.
Borrowing money, whether from your retirement account, a bank or family member comes with costs. Not only are you betting on having more money in your future with which to repay the loans – not always a sure deal in these uncertain times – there is the added cost of interest payments.
If you refinance or take out an equity line secured by your home, you run the risk of owing more than your house is worth. Georgia has one of the highest foreclosure rates in the nation with an average of one in every 328 housing units receiving a notification of foreclosure.
Debt relief strategies
If you are overwhelmed by your financial obligations, there are a number of strategies for dealing with your overwhelming debt. For some people, filing bankruptcy is their smartest option. Through a Chapter 7 bankruptcy filing, all non-secured debts may be erased and a Chapter 13 bankruptcy can make it possible for you to keep your home.
If you have a heavy debt load and are not sure of the options available to you, consult with a debt relief lawyer who can advise you of various strategies to relieve you of your financial burdens.
Mortgage Company Abuse
It seems that the more our government does to protect homeowners against unethical behavior by mortgage companies and their representatives, the more creative mortgage companies become at breaking the rules. The ongoing changes that were intended to protect us have made the law nearly impossible to understand for people who do not deal in it every day.
In many cases, this can put homeowners at a severe disadvantage because they never gain a complete understanding of their rights. Mortgage lenders prey on homeowners’ lack of knowledge about the law and use it to charge bogus fees, collect interest on homeowners’ payments that they have no right to collect and sell the homeowner products with terms that serve their own interests rather than the homeowner’s. These may include but are not limited to attorney fees, inspection fees and the creation of suspense accounts.
When you are struggling to keep up with your mortgage payments and facing the possibility of losing your home to foreclosure, don’t feel like you have no other option but to let the bank take it from you. Filing for bankruptcy stops all collection activity, including foreclosures. Filing for bankruptcy can give you the time you need to get your life in order and develop a plan to get back on the right financial path.
At the law firm of Claeys, McElroy-Magruder & Kitchens, we dedicate our practice to helping people obtain the debt relief they need. We understand how devastating it can be to face the prospect of losing your home. Our Augusta foreclosure attorneys are committed to working with you to find a solution that allows you to keep your home and take back control of your finances.
Stop Debt Lawsuits
If you are behind on payments to any creditor, such as a credit card company, hospital or medical clinic, landlord or even a friend who loaned you some money, that creditor may have the right to take legal action against you to get the money you owe, or the creditor says you owe. If you have been served with a lawsuit by one of your creditors, it is important that you take immediate action to resolve it. If you don’t, it could lead to a number of negative consequences.
At the law firm of Claeys, McElroy-Magruder & Kitchens, our Augusta lawyers can stop any debt lawsuit you may be facing by filing a Chapter 7 or Chapter 13 bankruptcy petition on your behalf. Under the law, once you have filed for bankruptcy, all collection activity must stop immediately. This includes lawsuits seeking to recover most, if not all, types of debt.
For many people, having a vehicle is essential. Work obligations, family obligations and other responsibilities all involve the need for reliable transportation. When we are facing financial hardship, however, it can make keeping up with car payments extremely difficult. If you get too far behind on payments, your lender could order the repossession of your vehicle.
If you are behind on your car payments or you have been notified of your lender’s intent to repossess the vehicle, you should talk to a qualified Georgia bankruptcy lawyer as soon as possible. Know your rights before your lien-holder takes advantage of you. At the law firm of Claeys, McElroy-Magruder & Kitchens, our Augusta attorneys can stop repossession and help you keep your car through a Chapter 7 or Chapter 13 bankruptcy filing.
Stop Creditor Harassment
One of the greatest benefits our clients report after filing for bankruptcy is the end of the harassing phone calls and letters. This is all thanks to a provision in the bankruptcy code called the automatic stay. According to the law, once a creditor has been notified of a bankruptcy filing, it is required to halt all collection activity, including phone calls, letters, garnishments, foreclosures, repossessions and lawsuits.
At the law firm of Claeys, McElroy-Magruder & Kitchens, we are dedicated to helping the people of Georgia find sound debt relief solutions that give them the fresh start they deserve. Our Augusta attorneys can stop creditor harassment through Chapter 7 and Chapter 13 bankruptcy filings.
How Long Before The Debt Collectors Quit Calling?
This is one of the questions we most frequently receive from our clients after filing their bankruptcy petitions. Unfortunately, there is no precise answer. Once your petition has been filed, a notice is sent out to all the creditors whose debts were included in your bankruptcy. Upon receipt of that notice, the creditor is required to stop collections. This process typically takes around two weeks. If you receive calls in the days immediately after your filing, you can give the creditor your bankruptcy case number, and it will have the same effect as the written notice.
If creditors continue to call even after being notified, you need to let our office know. We will explain to them that we are handling your bankruptcy and that any questions regarding the debt they are attempting to collect should be directed to us. If they continue to harass you, we will pursue every available option in an effort to ensure compliance with the automatic stay.
Medical Debt Relief
Health is one of those things that most people take for granted. No one expects to become ill, and few, if any, of us have plans in place in the event that an illness or injury should come about. Even with the health insurance provided by most employers, one illness can leave the patient holding responsibility for thousands of dollars in medical bills.
With most of us already living paycheck-to-paycheck, just one unexpected medical bill can put an otherwise financially stable family into severe financial distress. If medical bills are making it difficult for you to make ends meet, you should seek the advice of a reliable Georgia bankruptcy attorney who can help you understand your options for obtaining relief from your financial burdens. And, yes, your doctor will still treat you.
Bankruptcy Myths In Georgia
Over the years, there has been a large amount of misinformation about bankruptcy that people have grown to believe is true. At the law firm of Claeys, McElroy-Magruder & Kitchens, we provide comprehensive consumer bankruptcy services to clients throughout the Augusta, Dublin and Statesboro areas. Our attorneys have compiled a list of the most common myths that keep people from exploring the benefits that bankruptcy can provide.
The following are among the more common bankruptcy myths in Georgia:
Myth: If you file for bankruptcy, you can never get credit again.
The Truth: For many people, conditional credit offers begin arriving in the mail in as little as six months. Once you have established enough of a payment history, you will become eligible for regular credit and, eventually, traditional lending such as home and auto loans.
Myth: You will lose everything you own if you file for bankruptcy.
The Truth: In many cases, the opposite is true. While the trustee does have the right to sell non-exempt property in a Chapter 7 bankruptcy to raise money for creditors, he or she usually decides that the amounts owed on secured assets are more than their value.
Myth: After the 2005 laws went into effect, hardly anyone qualifies for bankruptcy.
The Truth: In fact, everyone who qualified prior to the change in the law still qualifies today. For some people, there may simply be a few extra steps involved in the process.
Myth: If you need to file for bankruptcy, you must be some kind of deadbeat.
The Truth: Absolutely not. Nobody wants to face financial hardship, and nobody wants to file for bankruptcy. Job loss, medical bills, divorce and many other causes have driven even the most financially secure individuals into severe financial difficulty. Oftentimes, filing bankruptcy is the financially responsible thing to do.