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Gastonia Bankruptcy Law Blog

Buying a home after a bankruptcy

Residents in North Carolina who experience serious troubles with debt may begin to wonder if filing for bankruptcy might be the best option for their situation. In evaluating this decision, people may factor in not just the ability to get out from under debt in the short term but also their long-term credit worthiness. Despite what some myths may abound, it is possible to re-establish good credit and even buy a home after going through a bankruptcy.

As explained by Lending Tree, anyone fresh out of bankruptcy should focus on rebuilding their credit. This may require the use of secured credit cards at first and eventually a person may obtain an unsecured card. Prudent use and repayment of credit with no missed or late payments will help a consumer's credit score to rise.

Creditor harassment and how to stop it

At Sigmon & Henderson, we understand that no one in North Carolina intends to go into debt. If you fall behind on payments to your creditors, it is probably because you do not have the financial capability to pay your bills, not due to a willful refusal to do so. However, creditors sometimes act as though you are withholding money from them on purpose, despite the fact that doing so can damage your credit. 

In addition to imposing additional fees and penalties on you, creditors often resort to bullying tactics in an attempt to get you to pay, all of which are aggravating and some of which are illegal. 

What might you expect to pay in a debt settlement?

It is often true when people say that negotiation is an art form. Doing it requires that one be able to properly discern the situation (which can be difficult). It is for this reason why many in Gastonia may simply avoid negotiating and simply pay what is asked (when in reality, they may indeed be able to get a better deal).

One scenario where you might think that negotiating is pointless is in paying your debts. After all, there is often little room to dispute that a is valid (especially when it comes to consumer debt). Thus, you might think that you have no leverage when trying to settle your debts with creditors. While it may be true that you owe the entirety of the amount a creditor is reporting, that creditor ultimately wants to be paid, Taking a hardline stance on the amount it is owed could force you into thinking you have little choice but seek measures in which it will get nothing. 

How to manage a bankruptcy with a divorce

Money has long been a source of strife for some married couples in North Carolina. In some marriages, financial troubles escalate to the point of being major contributors to the eventual breakdown of the relationship and the ensuing divorce. When this happens, some couples may find themselves trying to manage not only a divorce but a potential bankruptcy at the same time.

My Horizon Today indicates that people in this type of situation should take the time to carefully assess both their marital difficulties and, especially, their financial difficulties. It will be important to decide how to address the financial aspects of their marriage in part to know if they should file for bankruptcy together before filing for divorce or to pursue their divorce first and deal with their debts later on their own.

Why waiting to file bankruptcy can be costly

Many people often struggle with debt for many years and never consider bankruptcy due to a belief there is a stigma of being a failure related to it. Often though, the real failure is struggling with financial problems for a long period of time without ever considering the option of bankruptcy.

If you are one of the people who has been putting off filing for bankruptcy and believing that things will change for the better instead of staying the same, you may be interested in a recent report citing others who are in the same situation as you.

Basics of Chapter 7 and 13 plans

Consumers who live in North Carolina who find themselves under a growing rather than diminishing mound of debt may wonder if filing for bankruptcy is right for them. In assessing this, they will also need to understand the two types of consumer bankruptcy and how they differ so that they can make the right selection for their current situation and for their future.

As explained by Experian, a Chapter 7 bankruptcy is perhaps the most commonly used and known. This is often called a liquidation bankruptcy as some assets may be seized and sold, or liquidated, in order to repay some creditors for secured debts like automobile loans. For things like credit card debt that have no associated collateral, this liquidation process does not take place.

Building a better financial future after bankruptcy

If you are one of the many consumers in North Carolina who is struggling with debt and considering filing for bankruptcy, it will be important for you to understand how to move on past your bankruptcy to create a solid financial future for yourself. The purpose of bankruptcy is to allow you to become free of the debt that weighs you down today so you can start over. There are specific steps you will want to take to achieve this.

As explained by NerdWallet, you should plan on monitoring your credit scores on a regular basis. This will help you gauge how you are doing as you re-enter the world of obtaining and using credit. Your first type of new credit might be a secured credit card. This is a card which requires you to pay upfront the amount of your credit limit, almost like collateral. You should use this type of card for modest expenses on a regular basis and repay promptly. Eventually you may then qualify for an unsecured credit card.

Chapter 7 and unsecured debts

Consumers who live in North Carolina may well be looking at their credit card statements in January and feeling concerned about how they will pay off their holiday debts. This is not an uncommon situation but if those people went into the holiday period already struggling to keep up with their debt, the problem could make them consider filing for bankruptcy.

Bankruptcy can offer people a fresh financial start but before rushing into making the decision to pursue this path, it is important to understand what type of bankruptcy plan might be right for them and why. This starts with understanding the two primary types of debt.

Understanding debt consolidation

Debt struggles can afflict anyone in Gastonia, leaving them feeling as though the prospects of re-establishing a sound financial status are remote at best. The trouble that most encounter is that as they accumulate debt, it becomes more difficult to pay it off while also being to able to afford the everyday costs of living. Often, consumer debt is the culprit in causing financial woes. Indeed, per the American Economic Statistics Office, the average American household has over $15,700 in credit card debt. 

Many may feel their debts leave them with little choice but to seek bankruptcy. However, it is often encouraged that one seek other options before turning to such action. One of the more common alternatives to bankruptcy is debt consolidation. The website lists two distinct types of debt consolidation: using a balance-transfer credit card to pay off all debts, or securing a debt consolidation loan. The end result of both options is the same: combining all liability expenses into a single monthly payment. 

What is the bankruptcy means test?

If your struggles with debt have pushed you to the point of considering bankruptcy, many in Gastonia may advise you to file under Chapter 7. The main reason for this is it allows certain debts to be discharged and offers you a faster path back to financial solvency. It also may allow you to keep certain assets (such as your home) due to bankruptcy exemptions. However, the protection and benefits afforded through a Chapter 7 bankruptcy must be qualified for in order to keep people from abusing them. Your qualification is determined by evaluating your financial situation using the bankruptcy "means test." 

Prior to applying the criteria of the of the bankruptcy means test, your current monthly income must be determined (this is your net income, not your gross). If that number is lower than the median for your particular demographic group in your state, you automatically qualify for a Chapter 7 bankruptcy. If it is not, then the means tests is applied. According to the website for the Administrative Office for the U.S. Courts, your income is projected out over five years. If it is greater than $12,850 or 25 percent of your nonpriority unsecured debts (e.g., credit cards, medical bills, utility costs), then abuse is presumed and you cannot file for Chapter 7. 

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Sigmon & Henderson, PLLC
518 S New Hope Road
Gastonia, NC 28054

Phone: 704-269-6374
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