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How Can I Rebuild Credit After Bankruptcy?
For some people who are struggling with debt, bankruptcy can be a financial cure that offers a new start. However, this comes at a cost. One of the biggest drawbacks of filing bankruptcy is that it has a major negative impact on the filer’s credit. It can take years to repair your credit after you file bankruptcy, and you may experience difficulty obtaining loans during that time.
Rebuilding your credit after a bankruptcy discharge is a necessary first step to getting your financial life back on track. While it will not happen overnight, there are certain actions you can take to get a head start and speed up the process. Consult a North Carolina bankruptcy attorney who can guide you through bankruptcy and life afterward.
How Does Bankruptcy Affect My Credit?
If you are considering filing for bankruptcy, it is important to understand how it can impact your credit. This impact depends on which bankruptcy you file:
What Types of Debt Are Covered by the Fair Debt Practices Act?
American consumers hold almost $18 trillion in debt, with the average household owing about $104,215. Most of this is mortgage debt, followed by credit card and auto loan debt. These figures suggest that consumers are saddled with serious financial obligations that many of them might not be able to meet. The creditors who own this debt, like banks and credit card companies, use a variety of methods to try to collect payment for their claims.
The Fair Debt Collection Practices Act (FDCPA) places a limit on these methods, as this article will discuss. For more details and to learn about your rights under the FDCPA, contact a North Carolina Fair Debt Collection Practices Act attorney.
What Is the Fair Debt Collection Practices Act?
Creditors like mortgage lenders and credit card companies often do not have the time or resources to collect debt themselves, so they outsource the job to professional debt collectors. The Fair Debt Collection Practices Act (FDCPA) is part of the federal Consumer Credit Protection Act and offers a level of protection for consumers from debt collection companies. It prohibits them from engaging in certain practices in the process of trying to recover payments. Prohibited activities include:
Which Assets Can I Keep During Bankruptcy?
The fear of losing all their belongings keeps a lot of families from getting the debt relief they need through Chapter 7 bankruptcy. Although Chapter 7 bankruptcy does involve liquidation, not all of your assets will be taken and sold during this process. Quite a few of the things you own are exempt from liquidation, meaning that you can keep them even if you choose to file Chapter 7 bankruptcy. The goal of filing bankruptcy is to help your family get out from under crushing debt and get back on your feet. That would be very hard to do if you lost, for example, the car you need to get to work. A Charlotte, NC Chapter 7 bankruptcy attorney can tell you more about which assets are exempt from liquidation.
Exempt Assets in Chapter 7 Bankruptcy
Assets that are exempt from liquidation when you file Chapter 7 bankruptcy include:
Types of Bankruptcy for Small Businesses in North Carolina
As a small business owner, getting yourself out of a financial mess can be challenging. Understanding your options, particularly when it comes to bankruptcy, is helpful for making informed decisions about your company’s future. A North Carolina lawyer can help you understand the different types of bankruptcy for small businesses and their implications and help you determine the best option for your situation.
Chapter 7 Bankruptcy to Seek Liquidation
A Chapter 7 bankruptcy, often called "liquidation bankruptcy," is one option for small businesses in North Carolina. In this process, a trustee is appointed to sell the business’s assets and distribute the proceeds to creditors. Both sole proprietorships and corporations can file for Chapter 7, but corporations will not receive a discharge of debts.
The Chapter 7 process is relatively quick, usually taking three to six months to complete. It eliminates most unsecured debts and allows for a fresh start. However, business operations typically cease, and you will lose your business assets. Filing for Chapter 7 will also significantly damage your credit score.
What to Consider Before You File Bankruptcy for Your Small Business
As a small business owner in North Carolina, facing financial difficulties can be overwhelming. While bankruptcy might seem like the only option, it is helpful to understand the implications and alternatives before making this significant decision. A North Carolina lawyer can walk you through essential considerations to help you make an informed choice about filing for bankruptcy for your small business.
Assess Your Business to Make Sure Bankruptcy is the Best Option
Before contemplating bankruptcy:
- Conduct a thorough assessment of your business’s financial health.
- Review your cash flow, assets, and liabilities.
- Identify potential areas for cost-cutting or revenue increase.
- Most importantly, evaluate the viability of your business model in the current market. This analysis will help determine whether bankruptcy is necessary or if other solutions might suffice.
How the Fair Debt Practices Act Protects You During Bankruptcy
Dealing with overwhelming debt can be an incredibly stressful experience, especially when you are considering bankruptcy as a solution. However, knowing that you are entitled to rights and protections under the law, specifically the Fair Debt Collection Practices Act (FDCPA) is important. A North Carolina lawyer can help you understand how the FDCPA works to protect you during bankruptcy.
What is the Fair Debt Collection Practices Act?
The FDCPA is a federal law that regulates the actions of debt collectors and protects consumers from unfair, deceptive, or abusive practices. This law applies to personal, family, and household debts, including medical bills, credit card debt, and auto loans. While the FDCPA does not erase your debt, it provides a layer of protection during the debt collection process, even when you are going through bankruptcy.
Secured and Unsecured Debts in Bankruptcy Law
Filing for bankruptcy can provide relief and a fresh financial start when facing overwhelming debt. However, not all debts are treated equally in bankruptcy proceedings. Understanding the distinction between secured and unsecured debts is crucial for making informed decisions about your bankruptcy case. A North Carolina lawyer can help you determine which option may be the most ideal for your situation.
Secured Debts: Collateral at Stake
A secured debt is one backed by collateral, which is an asset that serves as security for the loan. Common examples of secured debts in North Carolina include mortgages, car loans, and certain types of personal loans.
If you default on a secured debt, the creditor has the legal right to seize and sell the collateral to recover the outstanding balance.
Can I Get Rid of Credit Card Debt by Filing for Bankruptcy?
Debt can be one of the most stressful problems in a person's life. People who owe a lot of money often feel as though they are stuck in a revolving cycle of debt, fines, and fees that they can never get out of. Credit card debt, in particular, can be very difficult to pay back because interest rates are so high, and penalties and fees add up quickly.
If this sounds familiar to you, bankruptcy may be just what you need. Bankruptcy is designed to help people get out from underneath major debt and get on with their lives. Although bankruptcy is not a magic solution to every financial problem, it can make managing your finances much more accessible, allowing you to pursue the future you want. A knowledgeable, understanding North Carolina bankruptcy attorney can help you understand the benefits bankruptcy could provide.
Does Filing for Bankruptcy Automatically Get Rid of All My Credit Card Debt?
Many people with a lot of credit card debt wonder if filing for bankruptcy will help them eliminate all their debt. Whether or not bankruptcy erases all credit card debt depends on several factors.
Can a Bankruptcy Lawyer Prepare Me for Life After Bankruptcy?
Filing for bankruptcy can be a difficult and overwhelming process, but it can also provide individuals with a fresh start and a chance to rebuild their financial lives. While a bankruptcy lawyer’s primary role is to guide clients through the bankruptcy process, they can also be important in preparing you for life after bankruptcy and setting you on the path toward financial stability. Contact an attorney in North Carolina to kick off the bankruptcy process with legal representation you can trust.
Getting a Better Idea of Your Financial Situation
Your attorney will review your income, expenses, assets, and debts to gain a comprehensive understanding of your financial standing. This analysis will help them identify areas that need improvement and develop a plan to rebuild their credit and financial stability.
What You Must Know About Small Business Bankruptcy
Bankruptcy can be a scary prospect for any business owner, especially for small businesses. If you are an entrepreneur considering bankruptcy, it is important to understand the different kinds of bankruptcy and how each may affect your business. Depending on what your goals are, there are various avenues you may choose to pursue at this time. To get started in pursuing bankruptcy, contact an experienced lawyer. This crucial first step will ensure you have the guidance necessary to make informed decisions.
Types of Small Business Bankruptcy
In North Carolina, small businesses pursuing bankruptcy usually file under Chapter 7 or Chapter 11 of the bankruptcy code. Chapter 7 involves liquidating the business assets to repay creditors, while Chapter 11 bankruptcy allows the business to reorganize and continue operating while repaying debts over time. Choosing the appropriate bankruptcy chapter depends on the business’s financial situation, goals, and long-term viability.
From our office in Charlotte, we serve clients throughout Mecklenburg County, Union County, and Gaston County, including Concord, Gastonia, Huntersville, Belmont, Davidson, Cornelius, Harrisburg, Matthews, Monroe, Fairview, Stanley, and Bessemer City, as well as other communities across North Carolina.
301 S. McDowell Street, Suite 1103, Charlotte, NC 28204
704-256-7766
