Chapter 7 bankruptcy involves paying as much of the obligations as possible by liquidating any assets that individual may have. The rest of the debt is dismissed. Chapter 13 sets up a repayment plan that can last up to five years. This allows many people the opportunity to pay back all, or nearly all, the money they owe to various creditors. A Bankruptcy Lawyer In Tacoma Wa would like to dispel some common misconceptions about this method for eliminating debt or making outstanding debt more manageable.
Future Impact on Credit
One misconception that used to have more basis in reality is the idea that filing for bankruptcy decimates the person’s ability to obtain credit for at least seven years. A bankruptcy filed by a lawyer such as Rafal Gorski, Attorney at Law, remains on the credit record for that length of time or even longer, but other factors can outweigh this one.
Effects of the Great Recession
Especially since the Great Recession, organizations that deal in financing and credit opportunities have become somewhat more lenient about how they view bankruptcy filings and credit scores. An enormous number of U.S. residents were negatively affected and are still struggling. In the past decade, it has become relatively common for bankruptcy filers to receive credit card offers within a year. If they accept and make payments on time each month, they can see their credit scores steadily rise.
Caution
Of course, it’s crucial not to become overextended again. Accepting one or two offers, making small purchases each month and then paying the entire balance with each bill is an effective way to boost the credit score.
Vehicle Financing
In addition, some used car dealers are willing to finance vehicles to buyers who have needed the services of a Bankruptcy Lawyer In Tacoma Wa. They may ask for verification of income and they are likely to charge a higher interest rate than the norm, but this allows someone who really needs to buy a car the opportunity to make the purchase. This individual may be able to pay the car off early or refinance for a lower interest rate after the credit score increases over the next year or two.
