Bankruptcy Filing Fees
There can b a variety of costs associated with a bankruptcy filing, some of the fees or costs are mandatory bankruptcy filing fees and some are optional costs such as hiring an attorney to represent the individual filing for bankruptcy.
At the time a petition for bankruptcy is filed, the petitioner is required to pay a bankruptcy filing fee. The bankruptcy filing fees required to file a chapter 7 case total $299.00, the bankruptcy filing fees to file a chapter 13 case total $274.00.
Bankruptcy filing fees for cases under all chapters of the Bankruptcy Code are prescribed in section 1930(a) of title 28. As of August 1, 2009, the filing fees are $245 for a chapter 7 case; $235 for a chapter 13 case. A person filing a bankruptcy case also must pay a $39 administrative fee. In addition, chapter 7 debtors must pay a $15 trustee surcharge. These miscellaneous fees ($39 administrative fee and $15 trustee surcharge) are part of the Bankruptcy Court Miscellaneous Fee Schedule prescribed in accordance with section 1930(b).
These bankruptcy filing fees total $299.00 for chapter 7 bankruptcy cases and $274.00 for chapter 13 bankruptcy cases.
One of the main purposes of bankruptcy law is to give a person, who is burdened with debt, a fresh start by wiping out his or her debts and thus after are made to keep the bankruptcy filing fees reasonable and provide assistance to those who cannot afford the fees.
The district court or the bankruptcy court may waive the filing fee in a case under chapter 7 for an individual, if the court determines that the individual has income less than 150 percent of the income official poverty line for a family the same size as the individual’s family.
Rule 1006 requires that an individual debtor either: (1) pay the bankruptcy filing fee in full when filing the petition, (2) file a completed application to pay the bankruptcy filing fee in installments, or (3) if the debtor files under chapter 7, file an application for waiver of the fee showing that the debtor meets the qualifications for waiver set forth in section 1930(f). The rule limits the number of installments to four, with the final installment due not later than 120 days after the filing of the petition.
The court can extend the time for paying any installment, but the debtor must file a motion explaining the reason an extension is needed. The last installment must be paid not later than 180 days after the filing of the petition.
Bankruptcy and Bill Collectors
Bankruptcy protection is made available to consumers who can’t pay their creditors or debts to help resolve the debt burden. One of the major benefits of filing for protection under Chapter 7 is that many creditor actions are stayed or brought to a standstill. This means that any debt collection efforts and foreclosure procedures are halted.
Once a creditor or bill collector has been notified that a consumer has filed for bankruptcy protection, the bill collector or collection agency must stop all efforts to collect the debt. There are certain and limited exceptions to that rule.
In a bankruptcy filing, the consumer or legal representative has to file a petition to the court and ask to discharge the debts. After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedule of creditors supplied to the court. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor. The process may take up to several days.
The stay or postponement of collection efforts arises by operation of law and requires no judicial action. If a creditor or collection agency continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for their conduct. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments.
Bankruptcy law is generally established to protect debtors who are in debt beyond their ability to repay the debt are a given an opportunity for a fresh start through the discharge of debts in a bankruptcy proceeding. Each state has its own bankruptcy laws, so you need to check with your state for details.
There are two basic types of consumer bankruptcy proceedings. Under a Chapter 7 bankruptcy filing, the petition to the court is a request to discharge all debts while a Chapter 13 bankruptcy filing, the petition is to pay off some of the debts over a period of three to five years.
The information is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of consumer bankruptcy.
Credit and Credit Scores after Bankruptcy
Filing bankruptcy is a series decision that impacts an individual’s credit and credit score for quite some time. Bankruptcy doesn’t have to shut off credit access altogether nor does filing bankruptcy have to be significant detriment for financial success. There are certainly numerous cases of individuals that have filed for bankruptcy and rebounded stronger and gone on to create significant wealth.
A bankruptcy is always one of the biggest negative factors that impact a credit score. How much of an impact it will have on an individual score will depend on the entire credit history and data in the credit report. As time passes, the negative impact of the bankruptcy decreases and the credit score will improve. A credit score can improve significantly faster with a little help and work.
Consumers who file for bankruptcy, file for a variety of reasons ranging from job loss, divorce, medical costs to poor credit decisions. In general, the reason for the bankruptcy doesn’t matter to future lenders and or the credit score calculation. If an individual filed for bankruptcy protection regarding only medical services this would have somewhat of a slighter impact than a bankruptcy that affects all credit. But bankruptcies that only include medial costs are rare and the credit score is going to take a big hit do to the bankruptcy record in most any situation.
The impact to an individual’s scores regarding future credit prospects are the same since most all loan decisions no longer look at qualitative factors such as why an individuals credit is poor rather banks and lenders just numbers such as the credit score and debt ratios, etc…
A credit score takes a big hit from the records of the bankruptcy on the credit report; the impact is different for all cases since the credit history of the individual is different before the bankruptcy. The credit reports of individuals that file bankruptcy often look bad with numerous late payments, collections, and judgments. The credit scores in these cases are already hammered pretty hard before any bankruptcy filing hits the credit report.
After a bankruptcy has been filed, the sooner the individual begins reestablishing credit in good standing, the sooner the credit score will rebound.
For those consumers that have credit available after the bankruptcy, they should keep that credit open. If an individual was able to keep a credit card that was not included in the bankruptcy because there was no balance on it, keeping the line of credit on the credit card open will help rebuild the credit score.
A good start for new credit is to obtain a secured credit card. In may help to even obtain more than one card and continually make monthly payments on time without running up new long term debt. As more time goes by after the bankruptcy the impact of the bankruptcy on the credit score lessens, and it may be possible to apply for a traditional credit card without security.
In general, the derogatory account information reported on a credit report has the most adverse affect on a credit score for the first 24 months after it is recorded. Once an individual is discharged from bankruptcy, they can apply and open new credit whether it’s a bank credit card, retail charge card, gas card and loan.
The nest step after establishing new credit, whether it be on existing accounts or secured credit cards, is to credit any inaccuracies in the credit report that may be holding the credit score down. If an individual finds inaccurate records on accounts that should be removed due to the dates or balances or amount owed, they have the right to dispute these errors. A dispute letter should be sent to each of the credit reporting agencies to correct the errors at Equifax, Experian, and TransUnion no matter how small the error is.
For each of the derogatory records or accounts on a credit report such as collection accounts or judgments or late payments, it is always helpful to check the dates and balances to see if either the amount is wrong on these accounts or to see if the account is past the deadline to remain in the report. Credit scores often have the greatest improvements when expired, derogatory data is removed or inaccurate derogatory data is removed. A key element regarding inaccurate balances is that if the creditor can not validate the amount to the credit reporting agency it has to be removed.
As a final note, always be extra careful not to make any late payments, using new credit responsibly, and don’t apply for too much credit without a purpose. Overtime a credit score will improve as new positive records are posted to the credit report.
The information about bankruptcy is for educational purposes only and is believed to be accurate but is not complete. Freecreditscorehelp.com does not offer legal advice. It is strongly recommended that individuals seek professional legal advice in the event of a bankruptcy filing.
Drawbacks of Credit Cards and Credit Use
One of the primary reasons consumers run into credit issues and subsequently suffer with a low credit score is too much credit card debt. Excessive and unmanageable credit card debt not only causes credit and credit score problems but also is a primary cause of personal bankruptcy filings.
The use of credit usually involves spending money that is not readily available. Obtaining a home mortgage is one form of credit in which borrowers use the money extended with the credit to buy a house. Most individuals would not have the cash available to buy a home without credit being extended with a mortgage. Historically, obtaining a mortgage to buy a house has been a sound use of credit since the borrowed funds were used to purchase and asset, and that asset usually appreciates in value while the debt obtained to buy the assets is reduced in value over time with monthly mortgage payments.
Credit card debt is also used to make purchases with money not readily available, similar to mortgage loan used to buy a house, but credit card debt is usually incurred to purchase disposable items not assets. Credit card purchases are rarely used to buy an asset that is going to appreciate rather they are used for toys, trips, TVs and related consumption goods.
Since consumers can spend more than they currently have with credit, they can easily spend more than they can afford. This is true when credit is used to buy a home but is especially true or more common when credit cards are used. The primary reason is that access to credit cards has been relatively easy and accessible allowing more consumers to lose control over this type of credit.
With credit card use, as the credit card balance increases with purchases and other transactions, the minimum monthly payments also increase, and soon many credit card users find themselves in over their head. This problem is exacerbated if interest rates on the credit card are high or have become high due to late payments and the credit card fees are accumulating. Unmanageable credit card monthly payments tens to lead to late payments and a deteriorating credit history.
Credit card debt generally carries a high interest rate. When someone buys a home, the interest rate on the loan is often 10% lower than the rate on a credit card. Since credit cards are so prevalent, very few consumers pay attention to just how expensive credit card debt is.
Due to these high interest rates, the minimum monthly payment on the total balance due may cover little more than the monthly interest charge. Consequently, the minimum payment may only minimally decrease what is already owed. The low minimum payments, high interest rates and ease of access frequently adds up to trouble for many consumers who end up struggling to pay off the debt they have accumulated to buy everyday items. The end result is a poor credit score, added stress and a decreased standard of living.
Many credit card holders try to manage the high interest rates by accepting promotional credit card offers to transfer credit card balances or open new credit cards with a lower rate. Often these moves simply exacerbate the debt load problem by adding new debt without paying off the accumulated credit card debt.
Some of the reason that new low rate credit cards and balance transfers fail to help is that the low rate offers may be offered on balance transfers with new purchases and cash advances are billed at a higher interest rate and the charges offset the savings you would otherwise enjoy. There are also limitations on the new low rates that are frequently ignored by the card holder as well as the problem that many credit card holders fail to stop using the older credit cards. The result again is higher monthly payment that can lead to late payments, a poor credit history and a low credit score.
To minimize the chances of being a victim of too much credit card debt and a low credit score as result of these burdensome payments, minimize or eliminate credit card use. If the funds are not available simply forgo the purchase. The headache of trying to pay off high rate debt is hardly worth the joy of a new TV, dinner out or other immediate consumption items. Low credit scores and poor credit histories start with too much credit card debt that started with just a little credit card debt.
Handling Credit and Credit Score Problems
Credit has become an almost indispensable tool in our society. Almost everyone uses some form of credit whether it is in the form of credit cards, car loans or mortgages. Credit allows us to purchase goods and services by paying for them later which can be very convenient to buy big ticket items or stretch our monthly budget. But credit can cause money problems if not managed wisely.
Money problems are often the immediate result of too much debt with unmanageable monthly payments. But money problems can also be compounded because of credit issues as result of unmanageable debt payments. The debt payment burden can be enough to worry about and try to manage but future money problems are sure to come as a result of a declining credit score and deteriorating credit history.
The first approach to help curtail future credit problems is to understand you have a credit and debt predicament. As simple as this sounds, far too many consumers ignore the warning signs and don’t handle their credit problems in their infancy but rather wait until the burden of bad credit and delinquent payments devastate their lives and relationships.
Some of the early warning signs of credit problems include:
You pay only the lowest amount due each month on your credit cards or other revolving credit lines.
You use your savings to pay bills.
You often get past due notices that include late fees.
You pay bills after the due date or skip payments.
You take out new loans or charge on credit cards to pay for basic living expenses.
You often use more debt to cover expenses or pay bills.
Collection agencies frequently call regarding past due obligations.
You are turned down for credit because of a poor credit history and low credit score.
The best advice to avoid the path of too much debt and a deteriorating credit report is to know in advance how much you can afford to commit to monthly credit payments. Monthly credit payments should not consume more than 15% of an individual or family income excluding the housing payment. Once debt payments pass this threshold, it is time to assess how severe your credit and debt issues have become and start a remedial course of action.
Before you approach monthly debt payments that are too hard to handle, credit should be limited to use for necessary purchases where the use of credit might have added attributes or for the purchase of assets. For example, credit can be used for purchase with a credit card where the protection afforded by a credit card service can be valuable or credit could be used for the purchase of an asset like a home. Credit for everyday consumption and shopping will always lay the ground work for future debt problems and credit score problems.
Once the debt amount and monthly payments grow out of control, getting out of that debt becomes harder and harder. With a plan of action and some discipline almost any debt problem and credit score can be fixed. The days of a debtor prison no longer exist. A good budget with some curtailed spending is the number one tool to getting debt under control and starting a path of a good credit score. But other options are available such as bankruptcy, debt consolidation loans and credit counseling.
The goal should be to understand the problem including the amount of debt, your income and expense position and set up a plan that can work for you. Begin by making a budget. Determine what you owe and what your monthly expenses are. This will help determine whether a good budget and a thrifty lifestyle can remedy the problem or more drastic action needs to be taken.
If the budget process is not enough, calculate out how much you can realistically afford to pay each creditor and approach the creditors to see if they will accept a lower amount or reduce the interest rate on the debts.
A debt consolidation may be another alternative. Be careful not to obtain a debt consolidation that only places you in a worse financial position. A debt consolidation loan used to pay off credit cards and other loans may be a possible solution but it may cost more in the long run.
The possibility of bankruptcy either with a Chapter 13 repayment plan or Chapter 7 should not be ignored when the debt levels are quite high. This decision should not be taken lightly but the stigma of bankruptcy really no longer exists so this option should also not be ignored.
Credit counseling is another option to consider. A good non profit credit counseling company can help work with your creditors to reduce the interest rates and possibly the amount owed and make a plan to get out of debt.
The two important considerations are to avoid using debt for transactions they should not involve the extension of credit and once credit trouble starts, nip it in the bud early no matter what method is used. No matter where you stand now, a good credit history and good credit score should be a goal to improve your lifestyle.
Repairing bad credit and a bad credit score is easier than most consumers believe. Disputing inaccuracies frequently removes more than just the inaccuracy, which often leads to an improved credit score. Secured credit cards and prepaid credit cards are quick and easy tools that can be used to rebuild credit. Prepaid credit cards generally do not require a credit report check and the credit card payment history will be reported to the credit reporting agencies to build a history and improve your credit score.
Fixing a bad credit score and high debt payments may not be easy but it is easier than those confronted with this condition often believe. Ignoring the problem will certainly not help; get debt help and credit score help now to start a path for a better lifestyle.
Bad Credit Options
Once your credit score is turned truly terrible and new credit appears to be unlikely, there are a variety of options to consider. First, don’t ever let bad credit get you down. There are millions of consumers who are having the same financial difficulties and struggling to review what options are left. There is always hope for someone who has a bad credit and bad credit score.
Regardless of how bad a credit or debt situation maybe, there are always some actions that can be taken. Actions that can increase your credit score or actions that can be taken to simply handle your debt payment problems.
The two biggest issues that generally face individuals with really bad credit is the inability to make certain purchases or procure services that require a good credit score and a good credit report. The second problem is that the individuals that have bad credit reports are often struggling to make their monthly payments.
The first key to improvement is to stop ignoring the financial position you are in. If you have bad credit, you already know how difficult it is to get the things you want as well as how hard is to meet your existing obligations. By addressing the problem and starting to fix the situation now, you are ensuring yourself a better future. It may take a little a time and sacrifice but for most people, anything is better than where they are now.
Whether you need to rebuild a damaged credit history or simply continue strengthening your rating, there are some simple things you can do to get closer to your goal. Here are the key elements to start down a path of better credit, a better budget and a better way of life.
First, fix your budget shortfalls. Analyze if there is problem with mismatched spending and income levels. Now, that sure is easy to say. But what do you do if your credit is ruined and your monthly expenses are killing you. The two options are to increase your monthly income or reduce your monthly expenses. For those individuals that have not reduced their expenses by buying less, shame on you. Cut back, cut back and then cut back some more. For most people extreme budgeting is biggest factor on the road to a better credit score and better living. The credit score is not that important but most of us can do without eating at McDonalds or going to the department for quite some time and in the end those changes will make life far easier.
If your expenses can not be reduced and the monthly debt payments are just too much, the next option to consider is a fresh start with a bankruptcy filing. Filing bankruptcy is a serious step to credit repair but when debts are overwhelming in may just be time to consult an attorney and see if this is the right option. Bankruptcy is a necessary evil and should not be frowned upon. Sorry for repetition, bankruptcy should not be frowned upon, file with a smile. You only have so many years on this planet, there is no reason to endure prolonged discomfort because of bills that are often the result of our lending industry over selling debt loads to you and millions of other Americans.
The next step is start immediately reestablishing new credit. This can be done in a number of ways such as secure credit cards, credit accounts that you may still have that available for use and new accounts at department stores. Even if the cost of the credit is moderately high, you do not have to keep a large balance on these accounts. Simply use the accounts to establish a good payment record so your credit going forward looks good and your credit score can be evaluated based on at least some timely credit payments.
Now its time to consider repairing your credit. This task involves making any payments you can on delinquent accounts. Use your judgment on which ones to address and which ones to tell go fish. After that, start disputing and correcting any errors in your credit report no matter how trivial the error is. The key is to dispute the error and hope the creditor does not respond to the credit reporting agency in time and the credit account is removed from your credit report.
We all know that good credit is important for a good financial future but equally important is living a good life that is free of guilt and concern about how to make your monthly payments.
Rules to Follow with Debt and Debt Collectors
We all want to pay our bills on time but sometimes due to some financial crunch it is not possible to make even the minimum payments and meet due dates. If a debt goes unpaid for an extended period of time, creditors may turn your account to a collection department or agency. It is true that debt collectors have the right to demand payment and take legal action if necessary, but often they would rather collect a portion of the debt than have to take more drastic actions.
Before you start dealing with delinquent accounts and collection agencies, take a look at your monthly budget. Take a real look, not a wishful peak. If your budget is upside down or underwater it is time to address this situation. Half the world has too much debt and is struggling; no one will look down on you because you are struggling too. But address your budget to obtain your own financial freedom, figure out how far behind you are and then what you can fix or maybe what you can not fix. Stress will kill you, not the credit card bill.
If your credit is not in terrible shape already, it may be possible to reduce your other monthly expenses. This may very well mean making hard choices or changing your lifestyle to fit your income and get your bills under control. A little bit of pain to reduce expenses is well worth it to alleviate the stress and maintain fair to good credit. Consider all options such as, selling a household goods, getting a part time job, taking equity out of your home, applying for a non secured signature loan, obtaining a loan from a relative or other money raising endeavors.
If the wolves are already at the door, that is the debt collectors and collection agencies, handle these debt collectors courteously and promptly. Often, creditors are more agreeable to working with consumers who admit they are in trouble and need some help with their budget and working things out.
Before you handle what it is that is coming your way, it is important to know where you stand. Try to understand what debts are delinquent, how much you owe and what your capacity is to pay these debts back. This is fairly standard budgeting 101. Unfortunately, for many consumers who are behind the eight ball the number one response to bill collectors and over indebtedness is to bury their head in the sand. Don’t be alarmed, this is a common response. But, try to pour an extra cup of coffee one morning and wrote down where you stand.
In the big picture, you can’t go to jail for owing money on your car or credit card or medical bill. Relax, but spend time to review where you stand. Delinquent debts are going to be reflected in your credit report and impact your credit score for the worse but you can rebuild and money is just money it is not love or happiness.
It is usually best to act quickly for the most effective resolution. Heck, if you can’t settle the bill to your satisfaction you can always try again. The faster you address the issue early on, the more likely you are to help save your credit report and credit score but equally important if you can not reach an agreement in the early stages with the bill collector, let them stew for awhile while you work on plan B.
Be prepared to negotiate. Collection agencies are almost always authorized to negotiate repayment terms that are significantly below the total amount of the debt. If you can’t pay the full amount, but are willing to pay a percentage, tell them so. In many cases, they will prefer to get something from you than nothing at all. Don’t cave in too early, make them work for their money and pay as little as you can.
Make sure not to offer too much information. Don’t give a collection agency your bank account information or credit card number. If at any time you feel pressured, slow the conversation, out the conversation on hold or if you are really feeling overwhelmed exercise some power and hang up. High pressure collectors should be hung up on or better yet if they are caught engaging in illegal collection activity they should be sued.
Collection agencies have had a reputation for bullying and even using threatening tactics to try to intimidate people into repaying debts. This kind of abuse and harassment is illegal and should be reported to the FTC.
The Fair Debt Collections Practices Act is a Federal Law meant for the protection of consumers. The Fair Debt Collections Practices Act outlines specifically what collection agencies can and cannot do when trying to collect unpaid debts. Some of the rules they must follow such as not being allowed to call at your workplace without your approval. If you need to or want to, you can send a letter using registered mail to the credit collection agency asking them to stop calling you. By law, the collection agency must comply.
Obscene language or threats of violence are absolutely forbidden and a collector is not allowed to threaten you with false statements. The law also defines the type of information a debt collector is entitled to collect from the debtors. The FDCPA spells out the rules for legal action that can be taken against the creditors and the collection agencies for violating the Act.
You should know your rights and demand to be treated fairly and with respect when you work with debt collectors and collection agencies.
If you are having too much difficulty making ends meet and your credit is already damaged you may want to put a hold on everything by looking into a bankruptcy filing. Consider this option if you are so far in debt that you can never repay it. Issues regarding bankruptcy should be reviewed with an attorney or at least a credit counselor. Bankruptcy can have the biggest impact on your credit profile and may be the least desirable from a credit standpoint. But, when it is necessary, it is a viable option that should not be ignored.
In the early stages of credit collections and debt management, the goal is to try and rearrange your budget and clear up the debts and keep your credit record from too much damage.