How much debt do I need to file a bankruptcy? It’s a common question. What seems like a small amount to one person can seem like millions to someone else. Generally speaking, the biggest qualification for a bankruptcy is debt you cannot pay. But how much is enough?
The best place to start is your credit report. You can pull a free credit report annually (www.annualcreditreport.com). Many people are surprised when debt and judgments show up from years ago.
It’s a common misconception that unpaid debt will just disappear. It is not magic – debt doesn’t just go away. Your creditors may write off the balance but the debt is still owed. Creditors just consider you to be a bad customer but are not collecting.
If total debt is approximately $10,000 or more, consider a bankruptcy. A Chapter 7 bankruptcy will eliminate any obligation to the balance and prevent creditors from calling you, suing you or trying to collect. If you have less debt but are behind on a car payment or a mortgage, a Chapter 13 bankruptcy can be an option. You can consolidate your bills into an interest free repayment plan and bring delinquent loan payments current.
If you are considering a bankruptcy, contact Geraci Law. We offer free phone and in-office bankruptcy consultations to figure out the best option for you. If we cannot help you, we’ll point you in the right direction.
If you think that all those collections, past due, late payment, and anything else you’ve stumbled on is good credit, you’re wrong! If you think that you’ll ever pay off a $10,000 repossession, better get 2 jobs.
If you think that your credit score is great now, don’t file bankruptcy, why should you? But if creditors are calling, lawsuits threatened, and you do file a bankruptcy, Chapter 7, what happens?
Your credit score improves after your discharge your debts!! how much? it can go from the 500’s to the 700’s. Why? You have no debt, except things like car and house you are current on! And you can start to save some money, build up emergency fund, open a bank account, and be a good credit risk.
Under Chapter 13, you can’t get more credit without court permission. But chapter 7 gives you a discharge of debt in 4 months. Geraci Law can then assist you in cleaning up your credit report, and improving your credit score. Ask us how.
Plenty of wall art!! Licenses, diplomas and certificates covering 20 feet of wall space, ran out of room!
I went down to Nashville recently for an intensive course in effective leadership using Dave Ramsey’s EntreLeadership principles. Dave Ramsey has devoted his career to Debtor Education the way I have to practicing bankruptcy law. Dave has quite a company, and his methods of operation are almost identical to Geraci Law. In fact, except for the obvious Christian background of Dave’s company, the guiding principles of Geraci Law are almost identical to Dave’s: honesty, integrity, and helping others come first. We even like the same Bible passages! And remember, Bankruptcy is a biblical law, Old Testament: Deutoronomy 15: 15 “At the end of every seven years you shall grant a release of debts. 2 And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release”.
Dave believes, as do I, that everything else follows if you do the right thing and help others. Dave Ramsey has a large meeting room where his 400 or so employees gather each week to share reports on the business operations. Geraci Law only has about 130 staff, but the Geraci Law teams also meet weekly, in person or electronically, and each team leader shares their reports. In that way, the organization is able to communicate and improve service to their clients. It was quite a thrill to meet Dave Ramsey in person, and we had a great time and learned a lot, although I think my Debtor Education Course at http://www.pfged.com is better than Dave’s!!
(his is pretty good, though, and his new book is great!)
We at Geraci Law strive to have “happy clients”. Why? Our clients are almost always under stress, and our mission is to take as much of that away for them as possible. Here is what one recent client took the time to say in a thank you card to me:
“I want to extend a warm thank you to you and all the lawyers at your firm. You have a wonderful group of lawyers and you have helped me get out of debt and start my life once again. I especially want to thank your lawyer at your Berwyn office because they personally helped with my case. I want to thank Frank Hernandez. He helped me understand the whole case, and always answered by questions. He is so generous he even shared his dinner with me once. I had never tried Italian Beef before then. I also want to thank Belfor. He always greeted me and welcomed me into the office. I have recommended your office to my friends, who also need help with their bills. Thank you Mr. Geraci for everything your firm has helped me with. The little things you do mean so very much. Thank you.
I will blog often about student loan debt. Student loans are just a bill you must pay. Most people have education debt in some form or another. Federal and private student loans are not typically handled by a bankruptcy filing. However, other debts like financed cars, credit cards can hinder student loans from being paid.
Student loans are the next housing bubble. Most families simply cannot afford to send children to college without financial help. Other than working with the financer directly (there are some programs available) there is not a 3rd party program to consolidate loans to an affordable payment. Simply, you must pay the loans.
On July 1st, the interest rates on federal student loans will increase. Stafford loans for undergrads will rise from 3.86% to 4.66% and PLUS loans will increase from 6.41% to 7.21%. If you have a large balance in student loans and other debt, the increased payment could significantly affect your budget.
Bankruptcy will not help eliminate your student loans. But, you could eliminate the rest of your debt to make the loans affordable. When there is substantial other debt (i.e. credit cards, payday loans, etc), something has to give. Whatever is not paid, can go into collections and ultimately into a lawsuit.
Take the long weekend and make a budget. You can use a Geraci Law version by clicking here. If you have more going out then coming in, give us a call to see if bankruptcy can help!
The Consumer Financial Protection Bureau released a report analyzing the effect of medical bills on credit scores. Findings show unpaid medical bills carry the same weight as unpaid rent when calculating scores. Medical debt and credit scores
Many people do not realize they owe medical bills. After a hospital stay or doctor’s visit, it’s easy to assume insurance covers 100% of the cost. If unpaid, a bill can go to collections and start negatively affecting a credit score.
Debt is reported to credit bureaus in two ways – from the original creditor (i.e. doctor, hospital) or from a collection agency. Majority (close to 99.4% according to Consumer Financial Protection Bureau) is reported by collection agencies.
Most medical bills are caused by expensive and unexpected procedures – i.e. emergency surgeries, hospital stays, and emergency room visits. Insurance may pay part but not the entire bill. You could easily find yourself owing thousands for an emergency room visit.
Bankruptcy is an option. If you have a tremendous amount of medical bills, filing a bankruptcy will alleviate the stress that comes with owing. I spoke with a man from Illinois who was diagnosed as a diabetic. He was uninsured and spent three days in the hospital. In the end, the bills amounted to over $80,000. Without a bankruptcy option, he would spend the rest of his life trying to pay down a three day visit.