Bankruptcy FAQ

Q. How does filing Bankruptcy affect my credit?

A.  Filing bankruptcy not only discharges your debt, it can also help in reducing the amount of debt on your credit report. Once credit bureaus receive the information regarding your new lack of debt, they will immediately update your credit information. This lack of debt will actually lower your credit score under the current system of credit scoring. A lower credit score can improve your chances of working with lenders in the future. However credit scores are not the only factors in a lenders decision.

Of course, most lenders require a stable source of income and the ability to repay the debt. But, they may also require you to have collateral, such as a car or home. Having such collateral can improve your chances of obtaining credit approval after a bankruptcy discharge. No law – state or federal – prevents a lender from approving your loan or credit application after filing bankruptcy. The decision lies with each lender based upon their own standards and guidelines regarding lending practices.

For more information on how credit bureaus score a Bankruptcy filing, contact the credit bureaus. Try: www.equifax.com

For a free credit report go online to: www.annualcreditreport.com

Q. Are credit counseling or debt-management companies better than filing for Bankruptcy?

A. While credit counseling is now required for all cases prior to filing bankruptcy, research needs to be done regarding which debt-management and credit counseling services you use. Some debt-management and banking companies will highly recommend credit counseling as an alternative to bankruptcy. However, in our many years of experience, our Second Start bankruptcy attorneys have seen a number of consumers drop out of credit counseling after only a few months of debt-management, only to later file bankruptcy

In cases where financial burdens are limited to negotiating monthly payments for unsecured debts (such as credit cards or medical debts), consumers may benefit from the assistance that debt-management companies offer. Every company’s fees vary, but the common rate for credit counseling is around $50. Most consumers choose to contact the creditor and negotiate directly. It is always important to remember that a debt-management company may not always know which option is best for your financial situation, nor are they qualified to determine all the potential legal issues you are facing. Moreover, you need to understand that your creditors have one thing on their minds: Making you pay your debt by any means necessary. They will not always have your best interest at heart.

Debt-management solutions are not an option for your secured loans (such as car and furniture loans and home mortgages). These creditors will continue to collect, repossess, and foreclose. You really need to consult with a qualified bankruptcy attorney before signing on with any debt-management company so as to prevent fraud, unnecessary risks, and to ensure that your financial needs are met.

Our Second Start attorneys are highly qualified and experienced, and wish to educate you as to all your options before making such a huge decision. Our initial consultation is free. Contact us and allow us the opportunity to assist you in easing such a stressful time for you and your family.

Q. Why do I need to consult a lawyer for Bankruptcy when a typing service will charge less?  

A. You need to understand that filing bankruptcy, and all of its components, is a legal issue subject to federal laws and is very complicated.  Only a licensed lawyer can provide you with legitimate counsel regarding the bankruptcy process.

Discount “typing services” cannot answer legal questions, nor do they have the extensive knowledge of the law to advise you on all of your rights.  These services also lack the knowledge of all the necessary procedures for filing.  All too often, our Second Start attorneys have seen more problems result from the use of these services due to mistakes made with your documents and forms.

In short, everything involved in your bankruptcy filing is subject to criminal prosecution for false oaths or failure to disclose all the required information.  And while mistakes can happen, an experienced bankruptcy attorney is going to help reduce the risk of these mistakes.  The last thing you need while filing bankruptcy is to add further legal issues due to avoidable errors.

Another thing to know is that typing services typically do not process Chapter 13 bankruptcy cases.  Chapter 13 can assist you in keeping possession of your property, requires a repayment plan, and the duration of a Chapter 13 can last months.  Because of the legal issues involved and the involvement of your home and vehicle, it really is important to consult with a bankruptcy attorney who can assist you with years of experience and knowledge.

Now that the law has changed, typing services can no longer assist you in reviewing your eligibility to file. This may cause your case to be dismissed despite filing a bankruptcy case. This is expensive, and you will still owe your debts.  Have an experienced bankruptcy attorney on your side for your own protection and peace of mind in an already stressful situation.

Q. Can you help with tax debts owed to the Internal Revenue Service or Michigan Department of Revenue?  

A. Yes, the IRS or MDR can be repaid in a Chapter 13 or Chapter 11. Filing Bankruptcy can stop a levy or other collection of the tax debts. In certain cases, some older IRS debts can be completely eliminated by a Chapter 7 discharge. However, cases involving taxes can be tricky to navigate and therefore an experienced attorney is needed to guide you through the processes. 

Q. Is there a charge to answer any of my other questions not covered on this web site? 

A. NO. Simply go to the Contact Us page and call us or e-mail your questions. We understand that filing bankruptcy is a huge decision and should be researched and thought through thoroughly. Our Second Start attorneys are waiting to answer any questions that you might have. You can even remain anonymous if you choose. No attorney should charge to answer questions. For emergencies - such as a sheriff's sale, foreclosure, repossession, or wage garnishment - we recommend that you contact the office for an immediate consultation. 1-800-SAVEDME (728-3363)