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Washington DC Bankruptcy Law Blog

How can you boost your credit score after bankruptcy?

Have you had to file for bankruptcy in Washington, D.C.? Are you worried about the long term impacts that this might have on your credit record? We at Ammerman & Goldberg wish to help you understand your rights, options and outlooks when it comes to the relationship between bankruptcy and credit cards.

The first thing you should be aware of is the fact that a bankruptcy filing will remain on your score report for ten years at the least. This might be scary to you, and it is one of the reasons why anyone considering bankruptcy should weigh all their options to make sure that this is the right one for them. However, it is not actually as intimidating as it sounds. As soon as your debts have been discharged, you can work toward establishing better credit.

What are a lender’s legal obligations in a foreclosure?

If you are behind on paying your mortgage, you run the risk of falling into foreclosure with the bank. Lenders in Washington D.C. are able to repossess property when a homeowner fails to make his or her payments. While the property owner may be at fault for missing payments, lenders have responsibilities that they must follow when going through the foreclosure process.

Before lenders can repossess property, they must give the homeowner sufficient notice that he or she has defaulted on the mortgage, according to the American Bar Association. Furthermore, the lender must let homeowners know that they have options when it comes to resolving their default status. For example, the homeowner may choose to go through foreclosure mediation with the lender.

Making payments in a Chapter 13 bankruptcy plan

Once a debtor has filed for Chapter 13 bankruptcy in Washington D.C., he or she will be required to make payments to the trustee who is presiding over the case. The trustee will then distribute the funds according to the priority of the creditors. According to U.S. Courts, there are three types of claims: priority, secured and unsecured. Priority claims involve debts that are deemed most important by the court, and may include bankruptcy fees and taxes. Secured claims include debt that must be paid on items that could otherwise be repossessed by the creditor, such as vehicles or homes. Finally, unsecured claims involve debts in which the creditor does not have the ability to reclaim property.

Debtors have a few options when it comes to making their payments. They can send a payment directly to the trustee, or have the payments deducted from their paychecks. It is crucial that people make their bankruptcy payments o time or they may have their case dismissed. This means that the person who filed for bankruptcy will once again face the debts that they had prior to filing for Chapter 13. In some cases, the court may convert the Chapter 13 case to a Chapter 7, or liquidation bankruptcy. If this should occur, the debtor could have some of the property repossessed by the court’s trustee. The trustee will then sell the property, and distribute the funds to the creditors in order to repay the debt.

How can you rebuild your credit following a bankruptcy?

Although you may have recently declared bankruptcy in Washington D.C., there is still hope for your credit score and your financial future. When you file for bankruptcy, it can stay on your credit report for up to 10 years and your credit score may fall dramatically as a result. This is not surprising, as a credit score is an indicator of how well you are able to repay your debt. Fortunately, there are things you can do to rebuild your credit score and get back on track when it comes to securing your financial future.

According to the Huffington Post, the first step in regaining control of your credit is to get a copy of your credit report and ensure that everything is correct. It is only when you are familiar with your report that you can understand what it takes for you to reestablish your credit. Once you know your starting point, make sure to pay all of your bills on time. Late payments are often reported to the credit agencies, so it is crucial that you show creditors that you are able to make your payments on time.

Saving your home with Chapter 13 bankruptcy

Many people in Washington D.C. and across the nation continue to struggle to make ends meet. Staying on top of all of the medical expenses, mortgage payments, credit card bills and other types of debt can be extremely overwhelming. At Ammerman & Goldberg Bankruptcy Law Office, we understand that people may not be able to continue making their mortgage payments while dealing with all of the other debt that has accumulated in their lives. While people who file for Chapter 7 run the risk of losing their homes through liquidation bankruptcy, Chapter 13 enables people to stop foreclosure and keep their homes.

During a Chapter 13 bankruptcy, people are able to consolidate their debt into an affordable payment plan that allows them to pay off their debt in three to five years. Homeowners create a plan with the lender, which allows them to continue making their mortgage payments in exchange for keeping their house. Not only does this alleviate the stress of having to find a new place to live, but homeowners may find that bankruptcy has advantages over foreclosure.  A foreclosure indicates that the homeowner was unable to continue making payments on his or her home, while a bankruptcy shows that the borrower still made mortgage payments even after he or she filed for bankruptcy.

Washington D.C. worst place for student debt

When Washington D.C. residents wish to obtain a higher degree, they may apply for student loans in order to fund their educational endeavors. While some people are able to pay off their student loans in a reasonable amount of time, there are others who simply cannot make their loan payments. Soon the student loans turn to debt, and some graduates may find it difficult to pay off this large sum of money.

According to research conducted by WalletHub, university graduates in Washington D.C. may have the hardest time paying off their student debt and rebuilding credit when compared to students in other states across the country. Researchers found that while students in some states have a harder time paying off their student debt, other graduates are able to pay off their educational loans in a timelier manner. During the study, researchers looked at how many people in the state had student debt, their income and how much of their income goes to paying on student loans.

Reaffirmation agreements and Chapter 7 bankruptcy

When filing for Chapter 7 bankruptcy in Washington D.C., people are able to discharge a number of debts to help free them from their heavy financial burden. During the process, people may choose to relinquish the payments on certain loans, and as a result, risk losing the property that they are paying for. For example, people who file for Chapter 7 and fail to make their auto loan payments may have their car repossessed. However, they will no longer be responsible for their monthly car expense. In some cases, debtors may decide to reaffirm the auto loan, continue making payments and keep their automobile.  

According to the U.S. Department of Justice, a reaffirmation agreement is a contract that the debtor makes with the lender, promising to pay for a loan even though the debtor has filed for bankruptcy. Depending on the financial institution, the terms of the loan may change to reflect a lower percentage rate or more affordable monthly payment as an incentive to the debtor to keep making payments.

Can a short sale save you from foreclosure?

If you are caught in a situation where a foreclosure on your home seems inevitable, you may want to look at all of your options before making the decision to walk away from your home. There are alternatives when it comes to gaining freedom from your home and from the financial burden it can have on your life. Depending on the circumstances surrounding your case, you may be eligible for a short sale in Washington D.C., which could help both you and the bank recover quicker than traditional foreclosure.

You may be eligible for a short sale if you need to get out of your home quickly, but owe more money on the mortgage than your home is worth, according to Fannie Mae. If the mortgage company accepts your application for short sale, it agrees to let you sell your property for less than you owe on it. For example, if the value of your property is $150 K, but $175 K still remains on the mortgage loan, you may be approved for a short sale. The variance between the amount of money your home goes for and how much is owed to the bank may either be forgiven or you may be required to repay a portion of the difference.

How can an automatic stay stop harassing creditors?

If you are buried beneath excessive amounts of medical, credit card and other types of debt, you may find it hard to keep up with your monthly payments. After some time, even the minimum payment can become overwhelming. It may not be long before creditors start calling, prompting you to make your payments or face unsightly fees, increased interest rates and other consequences. You may find yourself dodging creditor calls, letters and other attempts at reaching you. One of the benefits of filing for bankruptcy in Washington DC is that it can stop harassing creditors from contacting you.

Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, an automatic stay may be placed on your case once you have submitted all of the proper paperwork. Once the stay takes effect, creditors are no longer able to contact you regarding your debt, according to U.S. Courts. Instead, they must send all communications through your attorney. The automatic stay also stops wage garnishments, lawsuits and other forms of creditor harassment.

Debtor education and credit counseling 101

When people make the decision to file for bankruptcy in Washington D.C., they are required to take credit counseling and debtor education courses that have been approved by the United States Trustee Program. These mandatory classes help debtors understand the implications of filing for bankruptcy, as well as how people can manage their money in a way that will reduce their risk of falling into the same financial situation.

At least six months prior to filing for bankruptcy, debtors must enroll in a credit counseling course. According to the Federal Trade Commission, the certificate of completion must be submitted with the application to file for bankruptcy. During the course, the counselor will discuss possible alternatives to declaring bankruptcy. Participants will look at the factors that led them to their current financial situation and discover ways in which they can prevent becoming indebted in the future.

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