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How Will Filing for Bankruptcy Affect My Credit Score? By St. Charles Bankruptcy Attorney Tobias Licker

Filing for bankruptcy can provide relief by allowing you a fresh financial start. When you file for bankruptcy you will stop the harassing phone calls from creditors and debt collection agencies, you will be discharged of most or all of your debt and you may even be able to keep your home. However, filing for bankruptcy is not all good news.

One of the main concerns about filing for bankruptcy is how this financial decision may affect an individual’s credit score. When creditors, insurance agencies and potential landlords run credit checks, they are looking for information about how financially reliable you are. They want to know how likely you are to follow through on your future financial obligations. The credit score is one of the most important aspects and you may be surprised to learn that filing for bankruptcy can actually raise your credit score in some cases.

The first thing that you should know is that a bankruptcy filing will show up on your credit report. The record for a Chapter 13 bankruptcy filing can remain in your credit history for up to seven years, and a Chapter 7 bankruptcy filing record can remain for up to 10 years. The fact that the bankruptcy filing shows on your credit report does not mean that you will not be able to qualify for anything that requires an average credit score or better. Most of our clients qualify for a mortgage or car loan within one or two years after filing for bankruptcy. Many clients who did not qualify for a loan before filing, qualify right after filing for a car loan. The interest rate is in most cases better that it was before filing of bankruptcy.

If you file for bankruptcy with a relatively high credit score you may see a drop in your credit score at first. The effects of the bankruptcy will lessen as time passes, and you can work your way back up to a high credit score by reestablishing your credit.

On the other hand, your credit score may actually rise if you file for bankruptcy with a relatively low credit score. If your credit score is low due to unpaid debts, late payments and high balances you should see a rise in your credit score when you file for bankruptcy if the accounts are documented properly. The accounts that are included in the discharged debt should be recorded as being included in your Chapter 7 or Chapter 13 bankruptcy filing. When these accounts are documented properly your credit report should be almost completely wiped clean of late payments, delinquent accounts and other derogatory remarks. If these accounts are not documented correctly after you file for bankruptcy you should contact the offending creditors to request changes so that all of your accounts are properly documented. In the case your creditor does not respond, you can complain to the credit bureau directly which then will investigate and contact the creditor.

If you are living in the St. Louis Metro Area and have questions about filing bankruptcy please contact us for a free no-obligation consultation. One of our four bankruptcy attorneys can meet with you in person in one of our offices in St. Louis, St. Charles (O’ Fallon, St. Peters, Wentzville), Florissant (North County) or Granite City (St. Louis Metro East).

When to File Chapter 13, by Bankruptcy Attorney in St. Charles, MO Tobias Licker

If facing foreclosure or repossession, a Chapter 13 bankruptcy filing may be the right option for you

Filing for bankruptcy is an option for some people who are simply buried in debt. An individual, couple or company may file for bankruptcy due to a change in income or a loss of revenue. Certain circumstances may force an entity into bankruptcy, like medical bills or a change in lifestyle, such as a divorce. For individuals and couples, the common options for bankruptcy are filing a Chapter 7 or Chapter 13.

What is Chapter 13?

If facing foreclosure due to some missed mortgage payments, or to keep a car from being repossessed a Chapter 13 filing will allow the individual or couple to create a payment plan to catch up with missed payments. The payment plan may span over a three to five-year period, depending on the household income and the monthly amount of the payment plan.

While the bankruptcy is in process, an automatic stay is put in place to keep creditors from repossessing or foreclosing on property. A few weeks after the initial filing, the Court will schedule a meeting of creditors where the bankruptcy trustee will meet with the debtor to verify the information on the bankruptcy petition. After the creditors’ meeting the court schedules a confirmation hearing to which the debtor does not need to appear. Only those creditors that object to the filing will appear and state their objections to the Trustee. In most cases, there are no objections and the chapter 13 plan can be confirmed.

The Chapter 13 Payment Plan

The Chapter 13 plan sets forth a payment plan for the secured, unsecured, and priority debt of the filer(s). Payments are received by the Trustee and distributed to creditors. A few weeks after the plan is filed with the court, a hearing is held to confirm the plan. If the Trustee does not object and finds that documents provided are “confirmable,” the judge will confirm the plan.

The debtor will make monthly payments to the trustee in form of a money order or cashier’s check. Should the unforeseen happen, and the debtor is unable to keep up with the plan’s payments, other options are in place to reduce payments or to convert the case to a Chapter 7 bankruptcy. A Chapter 7 bankruptcy generally liquidates the debtor’s non-exempt property to pay creditors.

The bankruptcy process is very complicated, and many forms must be filed in a timely manner in order to comply with the mandates of the court, as well as the requests of the Trustee. Retaining the services of an attorney who specializes in bankruptcy in your area is highly recommended to make sure all necessary documents are filed in accordance with the court’s schedule. If you are considering filing for bankruptcy, consult an attorney to find out more about whether you should file a Chapter 7 or Chapter 13.

What does the Bible say about debt, by St. Louis Bankruptcy Attorney Tobias Licker

Bible and Bankruptcy, Part 1 by Bankruptcy Attorney in St. Louis Tobias Licker

What does the Bible tell us about bankruptcy? The authors of the Bible didn’t know about Chapter 7 and Chapter 13, however, the question what happens if a debtor cannot afford to pay back his debt is older than currency itself. One of the first known currencies, barley and shell money, were used as early as 3,000 years BC. With the use of money comes the option of lending and borrowing money; and the question of what to do when an obligation to pay cannot be satisfied?

Many of the Bible verses are familiar and are applicable to the financial situation today. Leviticus 25:14 says: “If you sell land to one of your countrymen or buy any from him, do not take advantage of each other”. Sound familiar? This seems to have been to problem that caused the mortgage crises in 2009. Houses were sold to families who were not able to afford them and under conditions that required refinancing at a later time under unknown conditions.

The general rule is to help a person who is poor and unable to support himself. Leviticus 25:35 “If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so he can continue to live among you.”

The Bible even gives instruction to creditors on how to comply with the general rule of helping each other so that no one is forced into slavery or unable to support himself and his family.

A number of clients, even bankruptcy attorneys are under the mistaken belief that the waiting period between two Chapter 7 bankruptcy cases is 7 years. This is wrong. Before the law changed in 2005 the waiting period was 6 years, and after the new law took effect the waiting period is now 8 years. So I ask, where is the widespread belief that it is 7 years coming from?

Does it come from the fact that this kind of bankruptcy proceeding is dealt with under Chapter 7 of the United States Code. To file a chapter 7, you would have to wait 7 years? If that would be the reason, why don’t we hear from clients and attorneys that you would have to wait 13 years to file a new Chapter 13 Bankruptcy case, or 9 years in order to file a second Chapter 9 Bankruptcy case. It does not seem to come from the number of the Chapter.

It comes from the Bible itself:

Deuteronomy 15:1, The Year of Canceling Debts: “At the end of every seven years you must cancel debts.” The reasoning behind this command seems to be clear: To avoid that more people falling into poverty. When citizens become so poor, that they are not able to support themselves and their family, they must rely on others. Criminality will increase with the percentage of poor people in a society. It makes sense for a society to avoid that too many people fall into poverty. Deuteronomy 15:7 says “If there is a poor man among your brothers in any of the towns of the land that the Lord your God is giving you, do not be hardhearted or tightfisted toward your poor brother. 8Rather be openhanded and freely lend him whatever he needs. 11There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land.” Do Creditors read or follow the Bible? The commands of the Bible help keeping the social peace within a society. However, these rules are directed at individuals. A national operating payday-loan company might not have a conscience and has the purpose to maximize its profit.

The current political discussion about class warfare and the question whether the rich should pay more of their share to the society is as old as the Bible.

However, the commands we read in Deuteronomy are even more favorable than the bankruptcy rules today. In Deuteronomy 15:1, the debt is cancelled automatically every seventh year. The bankruptcy law became so complicated that it is nearly impossible to file a bankruptcy case without the help of an attorney. Filing bankruptcy costs money: court costs, required credit counseling, and attorney fees. In addition, the bankruptcy law requires a debtor to do a means test which determines if one actually qualifies to file a Chapter 7 bankruptcy. If the debtor “fails” the means test, he will need to file a Chapter 13 bankruptcy case and possibly repay some of the debt to his creditors based on his disposable income.

Part 2 if the Bankruptcy and Bible article will follow.

What is a hardship discharge in a chapter 13 bankruptcy case?

The hardship discharge is a great tool in chapter 13 bankruptcies to help debtors get a discharge when they cannot complete the chapter 13 for reasons outside of their control, such as becoming disabled or losing their job. The possibility of a hardship discharge is often overlooked, unknown or not correctly applied. Under §1328(b) U.S.C. a hardship discharge will be granted by the court if the following conditions are met:
1. Your creditors have received in your chapter 13 as much money as they would have received if you would have filed a chapter 7 bankruptcy case. If you have un-exempt equity, that un-exempt portion would need to be paid to a chapter 7 trustee. In a chapter 13 case it would be part of your plan payment and would have to be paid in full before you can apply for a hardship discharge.

2. The debtor cannot continue with his plan payments due to circumstances that are beyond his control and cannot held accountable for. Examples include losing your job, becoming ill or disabled for an extended period of time.

3. The last requirement is that a modification of the plan will not be practicable, meaning that amending the plan would not help the debtor to complete the plan.

One important effect of a hardship discharge is that the debtor will not receive the broader scope of the chapter 13 discharge but that of a chapter 7 discharge. That is important to remember. §1228(c) refers to §523(c) which excludes from discharge for example all debt incurred in a separation or divorce proceeding. If that was one of the reason the debtor filed a chapter 13 and not a chapter 7 bankruptcy case, the hardship discharge might not be beneficial to the debtor.

What is better: Debt consolidation or bankruptcy?

How Excessive Medical Bills May Affect Bankruptcy Proceedings

Medical Bills and Bankruptcy

It is estimated that approximately 60 percent of all bankruptcies that are filed are due to excessive medical bills. Those filing bankruptcy due to these costs are not necessarily those who are poor or uninsured. In fact, of the people who file for medical bankruptcy, over 60 percent attended college, over 65 percent own a home, and roughly 20 percent include a family member who is either an active duty military member or a veteran.
Due to the many restrictions, deductibles, copayments, and limits on health insurance policies, medical bills can still oftentimes spiral out of control. So it may not be surprising that nearly 80 percent of those who file bankruptcy based on medical expenses are insured.
In any case, the coupling of out-of-control medical expenses along with mounting credit card debt and higher than expected mortgage payment adjustments, can lead one to an unmanageable amount of debt.
Those who file for bankruptcy can do so for nearly any amount of debt, provided that they are unable to pay it. In 2009, the average amount of medical debt owed by a bankruptcy filer who had medical insurance was approximately $17,000. For those without insurance coverage, the average was closer to $27,000.

How Bankruptcy Based on Medical Bills Works
When filing bankruptcy, your debts need to be classified as either secured or unsecured. Debts that are secured include your home or car – in other words, debts that are secured by a physical item that may serve as collateral for the debt that is owed.
Conversely, unsecured debt is that in which there is no physical collateral to back up the amount that is owed. For example, amounts owed for services such as home repairs or medical services as well as payday loans and personal loans are considered to be unsecured debt.
Because medical expenses are considered to be a type of unsecured debt, these debts will be eliminated through a Chapter 7 or a Chapter 13 bankruptcy filing.
One of the first steps in the process of deciding which chapter you should file under is to make a list of all of your creditors. This list should include the names of all creditors, in addition to their address, your account number with that creditor, and the amount that you owe them.
You will then need to decide, based upon your overall situation, whether Chapter 7 or Chapter 13 bankruptcy is the right choice for you. Keep in mind that there are pros and cons to each type. Making this decision may best be done via the advice of an attorney.

Where to Turn?
The filing of bankruptcy for medical debt can be an especially complex issue. Therefore, it is important to seek the services and advice of an attorney who specializes in the area of bankruptcy. Because bankruptcy laws are federal and state related, a lawyer in your state of residence will be best able to guide you on what options you have available, based on your specific situation. Our bankruptcy lawyers in the St. Louis and Metro East area have experience and offer a free consultation.

Discharge of Debt

A debtor can obtain a discharge of debt by filing for bankruptcy. A discharge of debt releases the individual’s personal liability for many types of debts. A discharge prevents creditors from making any collections efforts upon the debtor including phone calls, letters, and threats. If you live in the St. Louis Area, being represented by one of our St. Louis or St. Charles Bankruptcy Attorneys is the first step to a successful bankruptcy filing. We also have a bankruptcy attorney in the Metro East of St. Louis available for help with filing for bankruptcy.

Bankruptcy Attorney Tobias Licker

Many types of unsecured debt can be discharged, including credit card debt, pay day loans, and medical bills. However, there are other types of debt that cannot be discharged through bankruptcy. Some examples of debts that cannot be discharged are certain tax liabilities, student loans, financial responsibility for any injury caused while driving while intoxicated, child support, alimony, and some debts to governmental agencies. Further, if there are existing liens on property they will not be discharged. The individual is still responsible for anything not discharged by the bankruptcy proceedings.

Discharge varies slightly between Chapter 7 and Chapter 13 filings. In a Chapter 7 Bankruptcy filing creditors are given notice of the proceedings and are given time to object. If no objections are received the debt is generally discharged automatically. The Court also has certain requirements and regulations for discharge and may dismiss a case if the requirements are not met in a timely manner. Some of the requirements of the court are that the individual provide tax documents and complete a course on financial management. The court may also dismiss a case without discharge for any type of fraud, concealment, or failure to account for assets. In a Chapter 13 Bankruptcy discharge of debt occurs when the reorganization plan is paid in full. In Chapter 13 filings, like Chapter 11 filings, creditors are given the opportunity to object at the plan confirmation hearing. Creditors may not object to the discharge upon completion of payments under the plan.

It is important to note that in Chapter 7 bankruptcy proceedings the court may revoke a discharge under limited circumstances. The grounds for a revocation closely resemble the grounds of the court to dismiss the case without discharge, including fraud or concealment. In a Chapter 13 filing the court may revoke either confirmation or the discharge of the plan for fraud.

After your debt is discharged it is not legally enforceable and creditors are not legally allowed to attempt to collect a discharged debt. Should a creditor attempt to collect discharged debt a motion can be filed with the court to reopen the case to address the creditor. The court may punish creditors for violating a discharge order.

Though a creditor may not attempt to collect a discharged debt, you may opt to voluntarily pay the amount that was discharged. It is imperative to note that this may only be done after a final order has been issued and the bankruptcy is complete. This most often occurs when the relationship between the parties is of personal importance to the individual, for example, if debts to family or friends were discharged.

Should I file my reaffirmation agreement?

Benefits of a chapter 13 bankruptcy case.

Chapter 13 Bankruptcy has the same benefits than chapter 7 but in some situations it is the better choice. If you live in the St. Louis Metro area please contact us with any questions you might have. Visit our web site for more information about chapter 13

A Brief Overview of Nondischargable Chapter 7 Bankruptcy Debts

This article considers some of the debts that cannot be discharged by filing for Chapter 7 bankruptcy protection. It also provides a brief explanation why you may not discharge these debts during the Chapter 7 bankruptcy process.

Bankruptcy Attorney Tobias Licker

Attorney for Bankruptcy, Chapter 7 and Chapter 13

Many St. Louis debtors think that all of their debts can be discharged by filing for Chapter 7 bankruptcy. This assertion is false because the United States Bankruptcy Code features provisions that clearly describe debts that are not allowed to be discharged by filing for Chapter 7 bankruptcy. These provisions were established to prevent people from escaping certain financial obligations that are enforceable by a court or government agency.

To see why this is the case, let’s take a look at a few of the debts that can’t be discharged by filing for Chapter 7 bankruptcy protection.

–Domestic Support Obligations:

Domestic support obligations such as child support and alimony payments are not discharged during the bankruptcy process. The reasons behind this rule are complex. As a result, be sure to visit a St.Louis bankruptcy lawyer or a St. Charles bankruptcy attorney for more information. They can help you understand why these obligations are nondischargeable during the bankruptcy process.

–Civil Fines & Restitution Payments:

Missouri debtors may not discharge civil fines that were imposed by a court or federal agency as a punishment for breaking a law. This is the case because it would defeat the purpose of imposing the fines as a form of punishment. The same reasoning applies for restitution payments you must pay as a consequence of a criminal verdict filed against you in a federal court.

–Some Tax Debts:

For example, tax debts that are incurred as the result of fraud are not dischargeable. Moreover, business taxes such as payroll taxes, excise taxes and most customs duties are not dischargeable. Business taxes are not dischargeable during the Chapter 7 bankruptcy process because they are not considered to be a consumer debt that can be governed by consumer bankruptcy laws.

–Unlisted Debts:

Debts that are not listed on your Chapter 7 bankruptcy petition might not be discharged depending on the case law of your district. In the Eastern District of Missouri for example, not listed debt is not discharged in asset cases, but is discharged if the trustee did not recover any assets. As a result, we highly recommend that you visit a St. Charles bankruptcy attorney or a St. Louis bankruptcy lawyer to go over your bankruptcy petition. It’s a good idea to visit these bankruptcy lawyers because they can help you review your creditor schedule to ensure you have listed all of your debts and creditors on your Chapter 7 bankruptcy petition. Most bankruptcy attorneys will download your credit report for you, often for a fee the attorney has to pay to the credit report provider.

–Finally, you may not discharge a debt if your creditor successfully objects to its discharge. Creditors may only collect on a dischargeable debt if they file a motion and prove that the debt was somehow incurred by fraud, misrepresentation, or by an intentionally malicious act. Proving this can take some time and effort. As a result, most creditors don’t bother to try to object to a debtor’s discharge request unless it involves a significant amount of money.

However, please ask a St. Louis bankruptcy lawyer or a St. Charles bankruptcy attorney if you are experiencing problems with creditors who object to your discharge request. They can help you find ways to resolve this problem that can help you complete your Chapter 7 bankruptcy petition successfully.

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