Bankruptcy does it allow you a fresh start, my credit is already a trainwreck due to health reasons, Ideas?

Answer 1

Bankruptcy will help you get out from under the majority of your financial obligations, but not all of them. In addition, the bankruptcy will stay on your credit report for 7 years. However, many people who file for bankruptcy are approved later to buy cars, even houses, so there is some leniancy there.

Be warned that the rules for bankruptcy have changed, though. It used to be that it was easy to file a Chapter 7 bankruptcy, and have all of your debt wiped clean (with the exception of certain government debts). These days the requirements are much stricter. The change came in the past year or so. You basically need to be receiving virtually little to no income in order to file Chapter 7 now. That's why there was a sudden rush just before the law changed with people wanting to file Chapter 7 before the new rules went into effect.

Most people are forced to file Chapter 13 instead, which dissolves a percentage of your debt (usually somewhere around 80%), and then has you pay off the remainder over a period of time. Usually this has to be less than five years. During that time interest will accrue on your balance. The courts will take into consideration your disposable income and will usually request a payment in their calculated amount, even if it is not necessarily something you can easily afford.

So, while bankruptcy is one option, you might want to check out alternatives, such as debt consolidation programs (the effect on your credit isn't as bad), taking out a loan, loans from friends/relatives, working out payment plans with your creditors, etc., before committing yourself to filing bankruptcy.

Hope this helps!

Answer 2

File Chapter 7. Yes, it gives you a fresh start. You will have some problems for the first year or so establishing credit which is why you need to be prepared to get a secured card immediatly after your BK is discharged. And, once the BK is over... YOU ARE NOT DONE!!!! You need to make sure that every creditor that you file against updates your credit report with a $0 balance. Creditors are notorious for not updating your credit once you're off their books. If they don't, follow up with them, mail them copies of your case. ANOTHER IMPORTANT POINT, MAKE SURE YOU HAVE YOUR ATTORNEY FILE AN AVOIDANCE OF LIEN against any creditors with judgments against you or your home. Just because the debt is gone, it won't get rid of the judgment which could still require you to pay. I'm a loan officer for a mortgage broker who specializes with working customers who have filed bankruptcy. After about a year, if you follow up by rebuilding new tradelines, it's possible to have a score back in the 600's. After 2 yrs, you'll be A+ again and after 5, you'll be golden. DO NOT FEEL GUILTY!!! Creditors EXPECT to lose some of their money, that's why you pay higher interest rates when you have bad credit, it covers other peoples mistakes. Take advantage of what Chapter 7 is for, you only have one life, live it debt free! And you can keep your house and car in a chapter 7. If they try to steer you towards a CH 13 (which is where you STILL pay it back), find another BK attorney. Good Luck!!!

Answer 3

Bankruptcy will relieve you of most of your current financial obligations, but it surely won't give you a 'fresh start' on your credit report. The bankruptcy will appear on your credit report, and you can expect increased difficulty and much more stringent requirements to obtain credit after filing a bankruptcy.

Answer 4

yes in a way is it,but as like mine i know what your saying, mine is due to health reasons too,
i would file for it and then get out of the burden your in and then try to start over again, if your a single person it will help you in a lot of ways. after you have done that then try to get a small credit card and rebuild your credit back up, keep paying on it when it comes in and rebuild it as much as you can.
you can make it if you try.