A LOT of people in need of debt relief are often hesitant to file bankruptcy for fear that it will ‘ruin’ their credit and that they will never be able to purchase a car or home again, or that they will never be able to rent an apartment if they ever have to move.
First of all, most people who are not paying their bills ALREADY have negative marks on their credit report. And as long as they continue to be delinquent, creditors will continue to report this information to the credit bureaus every single month. All negative information (late payments, foreclosure, collections, judgments, liens, etc.) will stay on your credit report for seven years from the date last reported. Read the above again. It’s seven years from the date last reported. What that means is that even if you paid your creditors in full right now, whatever they have reported in the past will not be removed. So, you may ask: “what’s the point of paying them now?” Well, the point is that they can no longer sue you of course, but it doesn’t mean that your past negative credit history is automatically changed.
In some cases, you may negotiate a “deletion” when negotiating with creditors. This means that in exchange for paying the debt, the creditor must be willing to not only release you from liability but to also remove past derogatory remarks reported to the credit bureaus. While this may be possible in some cases, most bill collectors simply are either too lazy or don’t care. They will often tell you that it’s not possible and they will either make it difficult or impossible for you to get it done. Oftentimes, people do not have the leverage to negotiate this type of arrangement anyway especially when they are already under a threat of legal action.
Which bankruptcy chapter you file will determine how long the bankruptcy stays on your credit report. Chapter 7 stays on your record for 10 years from the date of filing, while Chapter 13 stays for 7 years. The good news, however, is that with Chapter 7, most people regain their good credit only after 2-3 years. That’s correct, only 2-3 years in most cases. So unless you are planning to make a major purchase in the next 2-3 years that will require you to have excellent credit, that short period of time is most likely nothing compared to the benefit you will get by wiping out your debts so you can change your life for the better!
What would being debt-free mean to you? That might mean getting rid of the monthly stress you experience every time the bills come. That might mean being able to save again for your children’s college education or your retirement. Perhaps it means not having to work 2 jobs just to make ends meet and not being broke and depressed every payday because you realize that money is never enough to meet even your basic needs. Can you just imagine how your life will change?
Don’t misunderstand me, please. I am not saying the bankruptcy is an easy way out and that you should use it to avoid your legal obligations. I am not saying that at all. What I’m saying is that if you have tried everything within your power to get out of debt but you simply cannot do it anymore, there is hope for you. If you are suffering in debt and feeling hopeless about your situation, there is a better way to live. We have laws in this country that allow you to start over with a new life free from the burdens of debt.
The catch? You must qualify. The law has requirements that you must meet to find out if you are eligible for debt relief. And as I said, if all you are worried about is the effect it may have on your credit, perhaps this is not even an issue if your credit has been ruined anyway. Or perhaps you may have what they call “excellent” credit but you owe too much already that no bank will loan you any more money because you are overextended. Does that make sense?
It all comes down to knowing what your priorities are. If you are seriously in debt with no way out, your priority should be finding a way to get out of the financial hole you are in before you drown. Because if you let that happen, your family (not just you) will suffer because of it and you may be suffering needlessly when the law has provided you a way out.
If you need help in figuring out your options, I want to help you. Call my office at (866) 477-7772 for a free office consultation. I have offices in Glendale, Cerritos and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.