Many of us, when we are going through financial difficulties, have relied on credit cards to get us through. We have “emergency credit cards.” We have the credit card to use in a pinch to get us through until the next pay check. To think about not having that safety net is scary, right? So, for many of us, to think about filing bankruptcy, even if it means getting rid of the debt that haunts us, it also means the scary thought of losing that safety net. What happens if I need money and I still have a week before my next pay check? What do I do? Does filing bankruptcy mean I lose all of my credit cards? What will be my back up plan? How long before I get another card? What will I do in the meantime? These are all valid questions and these are things Kain & Scott can help you answer as we prepare you for bankruptcy
Do my credit cards get closed?
All credit cards that have a balance get listed in the bankruptcy. It is up to the individual lenders as to when they close (or if they close). They may ask you to reaffirm the debt in order to keep a card open. This is not advisable. Reaffirming the debt means you will be liable for paying it and it cannot be discharged. The credit cards that do not get listed because they have a zero balance may stay open for a period of time because the lender will not receive notice of the bankruptcy. However, creditors pull credit reports periodically and once they see the bankruptcy, they may close your account (again, this is up to them). It is scary to think about not having credit cards when you have relied on them during some tough financial situations. However, once those debts are gone, you will feel relief and can start over. The monthly payments will be gone. Hopefully that can allow you the budget space to live “cash only” until your credit is rebuilt. There are also secured credit cards that you may be able to obtain for those emergency situations.
Will I ever get a credit card again?
The short answer is yes. Once you get through the bankruptcy and your debt is discharged, Kain & Scott offers a FREE credit repair program. Our Credit Repair Specialist will work with you and give you the tips and tools for rebuilding your credit. How long it takes to rebuild credit depends on the individual.
What is the bankruptcy process?
There are two bankruptcy options, Chapter 7 and Chapter 13. Both processes begin with a FREE consultation at Kain & Scott.
In a Chapter 7, a bankruptcy petition and schedules are filled out and filed. We do not send you home with a bunch of worksheets to fill out, however. We do the heavy lifting for you. We pull your credit and asset report and draft a petition and schedules (these are the documents that get filed to begin the bankruptcy process). We review these documents with you at our Review and Sign appointment. Usually your case is filed within about 3-4 days after this appointment. You must take a credit counseling course before you file and another one after you file. After your bankruptcy is filed, you will have a 341 meeting (commonly called a meeting of the creditors). At this meeting, the bankruptcy trustee (the person appointed to administer your case) will verify the information contained within your bankruptcy filings is true and correct. Creditors rarely show up to these meetings.
Approximately two months after the 341 meeting, you receive notice from the bankruptcy court that your debt has been discharged. That completes the process, assuming there are no snags or quirky things that happen in your case, such as unexempt assets or preferential payments (which can hopefully be resolved fairly quickly and without incident). No two cases are the same, so keep in mind that this explanation is simply an illustration of how a case should flow, not a guarantee that this is how it will.
The process for a Chapter 13 bankruptcy is fairly similar to the process for a Chapter 7. You have to take the two credit counseling courses. After you file, you have the 341 meeting. So, what is different? In a Chapter 13, instead of the debt being discharged after the 341 meeting, we create a payment plan and you make payments to the bankruptcy trustee, who then disburses those payments to your creditors. You make these payments for a period of 3 to 5 years. Any remaining debt that is dischargeable at the end of your payment plan is discharged.
How do you decide between a Chapter 7 and a Chapter 13?
The first factor is income. If you fall below what is called the “median income,” you automatically qualify for a Chapter 7 (though there are some circumstances that may necessitate a Chapter 13-your attorney will advise you if this is the case). If your income is above the median income, that does not necessarily bar you from a Chapter 7, it simply means that you need to go through an additional step, called the means test.
Either a Chapter 7 or a Chapter 13 can alleviate the problem of overwhelming debt.
How do I get started?
It’s simple! Call Kain & Scott at 800-551-3292 and set up a free consultation with one of our attorneys. You can even visit our website at www.kainscott.com and speak to a representative online to set up your free consultation. We do offer consultations via phone, Skype, Facetime, or in person at one of our several convenient office locations. Our attorneys and staff will be with you every step of the way through the bankruptcy process. Once your bankruptcy is complete, we don’t just kick you out of the nest and wish you luck. As a free service, after your discharge, Kain & Scott also offers a FREE 90-day Credit Repair Program. This program will assist you with rebuilding your credit post-bankruptcy and obtaining financing (if you need) from our list of trusted Minnesota Lenders. We want our clients to be able to get their fresh start with the right tools in hand. Call us today and let us help you get the relief you need!