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Bankruptcy is a major undertaking, so it’s important that you work with an agency that can help guide you through the process with empathy and expertise. When choosing a bankruptcy counseling and education provider consumers should:
The fee for the pre-filing bankruptcy counseling session by one of our professional credit counselors is $50 for single or joint filers. MMI will waive the bankruptcy pre-filing counseling fee for consumers whose household income is equal to or less than 150 percent of the estimated poverty threshold for their applicable family size as published in the current Federal Poverty Levels Guidelines.
Bankruptcy regulations require consumers to receive counseling within six months of filing. If you choose to file more than six months past the date of your initial bankruptcy counseling session, you will need to schedule another appointment to talk with a trained bankruptcy counselor.
Consumers filing for bankruptcy protection can file on their own; however, bankruptcy laws can be quite complicated. A trusted attorney may prove to be helpful. To find a bankruptcy attorney, consumers can ask someone they trust to recommend a good attorney or use the Attorney Locator resource at Bankruptcy.org to find a trusted attorney in your area. Take the time to make sure the attorney you choose is properly qualified and a good match. Filing bankruptcy can be an emotional event so it is important for filers to have a good relationship with their attorney.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 includes two provisions mandating financial counseling and education: Before filing for bankruptcy, consumers are required to have a briefing on the alternatives to bankruptcy; and before receiving a bankruptcy discharge a debtor is required to complete “an instructional course concerning personal financial management.” These provisions were included to provide debtors in bankruptcy with the skills and tools needed to avoid future financial problems.
This comprehensive course is a mandate from the EOUST (Executive Office for U.S. Trustees) and covers a variety of financial and budgeting topics. Please plan to dedicate a minimum of 120 minutes to complete the bankruptcy education course and note that a certificate will only be issued after this requirement has been met.
A notation that you filed for bankruptcy will remain on your credit report for seven to ten years, depending on the chapter you file. The most obvious ramification of filing bankruptcy is the difficulty you may have obtaining new credit with affordable repayment terms. Fortunately, you don’t have to wait seven to ten years to reestablish a strong financial foundation. After filing bankruptcy, consumers should adhere to this advice:
For more information, on how to recover from bankruptcy, consumers can visit Bankruptcy.org.
The fee for participating in a pre-discharge bankruptcy education course is $50 for single or joint filers. MMI will waive the bankruptcy pre-discharge course fee for debtors whose household income is equal to or less than 150 percent of the estimated poverty threshold for their applicable family size as published in the current Federal Poverty Levels Guidelines.
There are plenty of lenders out there that will finance someone with a bankruptcy. A quick search on the Internet will result in hundreds of potential lenders. Keep in mind that lenders make credit decisions based on a number of factors, not just whether or not you’ve filed for bankruptcy.
You may want to begin building a good credit rating by starting small. A secured credit card is easy to obtain and can help you to establish yourself as credit worthy. Be sure to read and understand all of the terms and conditions of any new loan.
One of our favorite guidelines is the 70 / 20 / 10 formula.
That means of your net income, no more than 70 percent should go towards living expenses. These expenses are for such items as house payment, food, utilities, etc. No more than 20 percent of your income should go to your creditors. These credit payments would include vehicle payments and credit card payments. The remaining 10 percent of your income should go towards savings, investments and to cover emergency expenses. If you follow this 70 / 20 / 10 formula, it will help you practice sound financial money management.
A Chapter 13 bankruptcy will continue to negatively impact your “credit worthiness” for up to seven years. Lenders try to judge “creditworthiness” when determining whether or not to loan someone money.
The good news is that your credit report is improving each month as your bankruptcy ages and you continue to use credit wisely.
For now, consider applying for a secured credit card, they are often easier to obtain. Be sure to make all payments on time and as agreed!
To get the bankruptcy off your credit history, all you have to do is wait. The Fair Credit Reporting Act dictates that a bankruptcy stay on your credit report for up to ten years. When the ten years is up, the bankruptcy notation should come off the report automatically. To verify that this has been done, you may want to pull a copy of your credit report. MMI recommends that you review a copy of your report annually anyway.
There is no legitimate way to remove a bankruptcy notation ahead of schedule. Be wary of any company that claims to be able to remove negative marks from your credit report - if those marks are accurate, they will continue to show for 7-10 years.
Chapter 7 bankruptcy is designed for debtors in financial difficulty that do not have the ability to pay their existing debts. A trustee takes possession of all your property but you may claim certain property as exempt from seizure under governing law. The trustee then liquidates your non-exempt property to pay your creditors according to priorities of the Bankruptcy Code. The purpose of filing Chapter 7 is to obtain discharge of your existing debts, however some debts are not dischargeable under the law.
A Chapter 13 bankruptcy is designed for individuals with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. You file a plan with the court to repay your creditors all or part of the money you owe them, using your future earnings. The court must approve your repayment plan before it can take effect. Under Chapter 13, unlike Chapter 7, you may keep your property, both exempt and non-exempt, as long as you continue to make payments under the plan. After completion of payments under your plan, your included debts are discharged.
A Chapter 13 bankruptcy stays on your report for seven years. If the notation remains beyond this time, it is an error and should be removed. To correct this error, you can file dispute forms with the credit reporting agencies. You should have received the forms along with your reports.
If you filed for Chapter 7 bankruptcy, the notation stays on your credit report for up to ten years. In this case, you’ll have to wait.
Either way, to improve your credit history, keep paying your bills on time and as agreed. The longer you go without adding any new negative marks, the better your score will eventually be.
A Chapter 7 bankruptcy notation will remain on your report for 10 years, starting from the filing date. A Chapter 13 notation would remain for seven years from the filing date.
Completing the bankruptcy process requires two certificates - pre-filing certificate and a pre-discharge certificate. The pre-filing certificate is obtained by completing a pre-filing bankruptcy counseling session. The pre-discharge certification is obtained by completing a pre-discharge education course. Both are available to begin any time at BankruptcyCertificate.com.
It is wise to research all of your options. We recommend that you speak with a trained credit counselor that can help you fully assess your financial situation. It may be possible to establish a debt repayment plan that is agreeable to both you and the lender. If a repayment plan is not possible, our agency also provides the necessary counseling to allow you to move forward with the bankruptcy process.
Unfortunately, this is a rather common problem. In fact, divorce is one of the top reasons consumers seek assistance from MMI. We recommend that you meet with a trained credit counselor. During your counseling session, your counselor will review your overall financial situation, discuss possible solutions and make recommendations for you to consider.
Effective April 3, 1994, wages of the military may be garnished. A judgment must be obtained in the state or county in which the debtor works and service must be made on the payroll office in the location where the debtor works. The only exception to this garnishment might be if the service member is stationed in a state that prohibits garnishment.
If you let anything (i.e.: car, boat, house, etc.) go back as a repossession, the lender will sell the item to the highest bidder and apply the proceeds of the sale to the balance owed on the item. If the sale price is not sufficient to pay the balance due, there will be a "deficiency balance" remaining. You will be legally obligated to pay this deficiency balance. If you do not pay this balance, the creditor can possibly sue you in an effort to try and collect from you.
The lender can also report this repossession to the credit reporting agencies. This derogatory notation will remain on your credit bureau file for 7 years.
Every situation is unique, and if you feel as though you can’t successfully manage all of your bills and debt obligations, consider discussing your situation with a trained credit counseling. The counseling is free and should help you get an objective viewpoint on your finances and your best course of action.
The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.
Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.
The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.
The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.
The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.