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Promoting a Proactive Approach towards Financial Security

May 2019 Archives

Determining whether Chapter 7 or Chapter 13 best fits your needs

Your credit card balance is out of hand. You have medical bills rolling in from the surgery your spouse had last year. Your boss informed you that the company is doing away with bonuses, which, in your case, amounts to a significant portion of income. One of your kids needs braces and you weren't able to make a mortgage payment the last two months.

Bankruptcy can help with medical debts related to cancer

California residents and others who are diagnosed with cancer may incur significant debt in an effort to overcome their illnesses. However, it may be possible to reduce or eliminate that debt by declaring bankruptcy. Furthermore, individuals may get relief from creditor phone calls, letters and other collection activities when they file. This ban on collection activities may provide emotional relief on top of the financial relief that may be available.

How to determine if a debt can be discharged

Consumers in California and throughout the country may be entitled to have some of their unsecured debts wiped out in bankruptcy. As a general rule, bankruptcy is available to honest debtors who are looking for a fresh start. However, there are many factors that a bankruptcy court may need to consider if debts were the result of fraud or similar activities. Specifically, debts may be not be discharged if they were accrued because of fraudulent conduct while acting as a fiduciary.

Debt consolidation or Chapter 13 bankruptcy

Many California consumers are struggling with ever-escalating amounts of debt. At the same time, many of them are reluctant to consider personal bankruptcy as an option. People can be afraid that bankruptcy may lead to tremendous financial damage that is difficult to recover from. As a result, they may look toward alternatives like debt consolidation to lower their monthly payments. However, these options can also take a toll on a person's credit report without necessarily providing the level of relief that people can obtain through a Chapter 13 bankruptcy.

Credit card statistics show growth in unrepayable debt

Many people in California are struggling under a significant debt burden that they may find themselves unable to repay. This is reflected in statistics in the credit-card industry that show that the rate of bad debt is climbing for people across the country. The rate of charge-offs, loans that the credit card companies have declared that they never expect to collect, rose to its highest level in nearly seven years in the first quarter of 2019. The figure rose to 3.82 percent, marking the largest share of unrepayable loans since the second quarter of 2012. This came together with statistics showing that loans 30 days past due also increased at the seven largest credit card companies.

Rebuilding positive credit after bankruptcy

Many people in California find bankruptcy a potentially appealing option, but they are worried about the long-term effects on their credit scores. After all, Chapter 7 bankruptcies remain on a person's credit report for 10 years while Chapter 13 bankruptcies, with payment plans and debt restructuring, persist for 7 years. Indeed, bankruptcy can damage a person's credit report significantly. However, at the same time, it is important to note that most people who are considering bankruptcy are already suffering from bad credit that makes it difficult to obtain credit cards, mortgages or loans.