No. A bankruptcy will cause an initial drop in your score, but in most cases the score will bounce back quickly, exceeding your pre-filing score within a year. It is also important to note that because each major credit bureau uses a different formula to determine your score, it may vary from institution to institution.
Yes, but it may have an influence on what chapter of bankruptcy you are eligible to file for. There are two types of bankruptcy that individuals generally file: Chapter 7 and Chapter 13. Chapter 7 has income limitations that may vary from state to state. In some cases, Congress will allow you to take certain income deductions that can lower you below the income threshold. If the deductions still do not reduce your income enough, you may file for Chapter 13 bankruptcy. Chapter 13 bankruptcy includes repayment, meaning you must repay your creditors not including interest or penalties, at a rate that is affordable for you.
Have Laws Changed, Making it Harder to File for Bankruptcy?
Despite a major revision to the bankruptcy code in 2005, the changes have had little effect on clients in the Upstate New York area. Many of the revisions included credit counseling both pre- and post-bankruptcy, and we’ve included links to providers of these services in our Helpful Links section. Another noticeable change was an increase in the cost of filing for bankruptcy. This is largely due to additional disclosure requirements. Even with an increase in costs, we have made it our goal to provide some of the most cost-effective prices in the Upstate region.
Will a Bankruptcy Stop a Creditor From Garnishing My Wages, Freezing My Bank Account, Repossessing My Car or Foreclosing on My House?
Almost always, an automatic stay, which is issued when you submit your initial petition, alerts creditors that they can no longer take any action to collect on debt. If a bankruptcy case has been dismissed within the last year, the duration of the stay is limited to 30 days, and if two bankruptcy cases have been dismissed within the last year, no stay is issued and a hearing will be held to determine whether or not one should be issued. Creditors who do not comply with a stay may be fined for contempt of court.
Due to new revisions in the bankruptcy code, clients are required to participate in a pre-bankruptcy credit counseling session before filing. For this reason, initial appointments typically cover a basic overview of your financial situation and last about 15-20 minutes. Although documentation is helpful, it is not necessary for the preliminary consultation.