Bankruptcy Myth 6: Filing Bankruptcy Means You’re a Bad Person

Over the years, I have learned that there is a lot of misinformation circulating about bankruptcy. Much of the information is good and gives fair description of how a bankruptcy filing may impact you. However, there is a lot of misinformation or simply untrue information about bankruptcy. The next several blogs will deal with a number of these myths people may read about filing bankruptcy.

Bankruptcy Myth 6: Filing Bankruptcy Means You’re a Bad Person.

FACT: Filing bankruptcy means you’re a good person, acting responsibly. Everyone wants to pay their bills. Everyone. And everyone wants to take care of their family and provide their family with all the things they need. Putting our family first and making the changes necessary to make sure we have a roof over our head, food on the table, and warm clothes to wear is the most responsible thing we can do.

You need to get over blaming yourself. Most of the people who file bankruptcy are good, honest, hard-working people, just like you and me, who file as a last resort after months or years of struggling to pay the bills. You’re completely wrong in thinking that you’re a deadbeat if you file bankruptcy. Filing bankruptcy is actually one of the most positive, responsible, honorable, and noble steps you can take on behalf of your family and your family’s future, happiness, and prosperity.

Bankruptcy Myth 5: You Will Never Get Credit Again

Over the years, I have learned that there is a lot of misinformation circulating about bankruptcy. Much of the information is good and gives fair description of how a bankruptcy filing may impact you. However, there is a lot of misinformation or simply untrue information about bankruptcy. If the next several blogs, will deal with a number of these myths people may read about filing bankruptcy.

Bankruptcy Myth 5: You Will Never Get Credit Again.

FACT: FILING BANKRUPTCY MAY BE THE BEST THING THAT EVER HAPPENS TO YOUR CREDIT. Filing bankruptcy gets rid of debts you can’t afford. Besides, having less debt to pay after a bankruptcy makes you look more attractive to banks, credit card companies, and other lenders. In my experience, unfortunately, it won’t be long before you’re getting credit card offers again.

5 Things to Consider Before Getting a Loan

Whether you are looking to start a business, put your kids through college, or purchase your first home, if you are like most Americans, chances are you probably do not have all the cash you will need to cover your costs. In situations like this, you will need to take out a loan to help you accomplish your goals. Taking on large amounts debt can be a major responsibility, as you are promising to pay back the principal amount plus interest over a certain period of time. Before you sign your name on a loan agreement, it is important you consider the following.

1. Check your credit score: Before you even apply for a loan, consider your credit history. Your credit score will have an impact on your ability to get credit and how much it will cost you. If your credit score is low, try to raise it before applying for a loan by paying off debts, correcting inaccurate information on your credit report, and making payments on time.

2. Secured or unsecured: There are two major categories of loans: secured and unsecured. Secured loans are backed by some form of collateral that the lender may seize in the event of the borrower’s default, such as a person’s home or vehicle. This added security usually makes secured loans cheaper in the long run, though borrowers stand to lose whatever they put up as collateral. Conversely, unsecured loans are not backed by any sort of collateral, meaning that the lender does not have any guarantee of repayment. Because of this risk, unsecured loans generally have higher interest rates. If you have good credit and you are sure you can pay off the loan in time, a secured loan may be the more attractive option.

3. Consider a credit card: A loan may not be your best option if you have good credit. If your credit score is excellent, you may be able to apply for a credit card with zero percent interest for the first year or even longer. Likewise, interest rates on personal loans may be higher than that of some credit cards. It is important you consider all options before deciding which form of credit you will choose.

4. Read the fine print: It is important you check to see if the prospective loan has any limitations or caveats, such as how the money can be spent, whether or not the loan can be repaid quicker than the stated time period without penalty, and how long it will take for you to gain access to the funds. Likewise, make sure you know what could happen in the event that you should pay late or default on your loan.

5. Avoid applying for too many loans: Whenever you apply for a loan, the prospective lender will check your credit history. This inquiry can lower your credit score by a few points. The more places you apply for loans, the more times your credit score will take a hit, thereby affecting your ability to qualify for the best interest rates. To avoid this problem, ask lenders about their rates before submitting an application and only apply for the best ones.

Bankruptcy Lawyer Serving Fort Worth

If you are struggling with debt, the knowledgeable Fort Worth bankruptcy lawyers at The Pritchard Law Firm can help you reorganize your finances and get you on the path towards financial freedom. Having helped countless clients overcome their debt throughout more than 45 years of combined legal experience, we have what it takes to help you get the results you need.

Call (817) 285-8017 or schedule a free consultation today to discuss your situation.

Does Paying My Taxes Late Affect My Credit?

Filing your taxes each year can seem like a jump into the unknown. If you are lucky, you get some money back from the Internal Revenue Service (IRS). If you are unlucky, you owe them even more than you have already given that taxable year. For millions of Americans each year, this amount owed is simply too great to hand over upfront, and they must use an installment plan approved by the IRS to pay off the tax debt over time.

While an installment plan to pay off taxes is beneficial to people in a financial crunch, the fear of it affecting their credit score is not uncommon. Thankfully, there are federal laws in place that stop agents from distributing taxpayer information, such as whether or not they are using an installment plan, to unofficial third parties. This means that credit bureaus that track, record, and control credit scores should have no reason to know or believe that you are using an installment plan. In layman’s terms, your credit score will not be affected by this decision.

In fact, using an installment plan can be a saving grace for your credit score. If you do not use one, accrue tax liens in excess of $10,000 from the IRS, and they claim your property later for not paying your taxes, the credit bureaus will get word of this through court records, which are available to the public. When they see a tax lien, whether it has been acted upon or not, credit scores can take a 100 point hit (on average).

So if you are short on finances but the IRS wants more money when you file your taxes, setting up an installment plan could be your best option to protect your credit score. If you need legal help when it comes to financial troubles, or if you are considering bankruptcy, you can contact The Pritchard Law Firm at . Our Fort Worth bankruptcy attorneys can provide you with sound legal guidance on how to find financial relief without damaging your credit score.

The Effects of Bankruptcy on Credit

One of the most common fears regarding bankruptcy is the effect that filing will have on a person’s credit score. When you file for bankruptcy, the three national credit reporting agencies, Equifax, TransUnion and Experian, are required to include your filing on your credit report for a period of 10 years. With that being said, this does not mean that you will have bad credit for 10 years. Your credit score can be greatly affected by your actions after you file, allowing you to improve your credit with responsible behavior.

Will Filing for Bankruptcy Ruin my Credit Score?

Not necessarily. If you had good credit before filing, your score will undoubtedly take a hit. This usually does not matter, as people who are considering filing for bankruptcy are often already in poor financial shape. If your credit score is already low, filing for bankruptcy will have a much smaller impact on your credit.

On the contrary, filing for bankruptcy can actually provide you with an opportunity to improve your credit score. Eliminating your unsecured debt through a Chapter 7 or Chapter 13 bankruptcy can allow you to get back on your feet and get your finances in order, making it much easier for you to make future debt payments in full and on time.

Do Chapter 7 and Chapter 13 Plans Have Different Effects?

Sometimes. While the nominal effect will be the same regardless of which plan you choose, some creditors will look more favorably on a Chapter 13 bankruptcy and see it as a sign of responsibility. This is because Chapter 13 involves establishing a repayment plan rather than discharging debt through liquidation, thereby making a person appear to be a better credit risk.

How Can I Improve My Credit After Bankruptcy?

One of the best ways to that you can restore your credit after filing for bankruptcy is through the responsible use of credit cards. Contrary to popular belief, getting a credit card after bankruptcy is relatively easy. A debt discharge from Chapter 7 bankruptcy can provide a reduction in your debt-to-income ratio, making you a less-risky lending option in the eyes of certain credit card companies.

While the credit limits of these cards will more than likely be low at first, consistently paying on time and in full every month can prompt lead to an increase in your credit limit and credit score over time. Good behavior can potentially be reflected in your credit score within two-to-four years after filing for bankruptcy.

Struggling with Debt? Call (817) 285-8017

At The Pritchard Law Firm, our skilled bankruptcy attorneys have helped countless clients in the Fort Worth area overcome their debt with our knowledgeable advocacy. If you are looking to file for bankruptcy, our firm can walk you through the process with ease and protect your interests every step of the way.

To get started, contact us online or request a free case evaluation today!

Three Common Myths About Bankruptcy

Bankruptcy can be a frightening concept at first glance. Due to its social stigma of being associated with failure and shame, many people have shied away from ever considering bankruptcy as a viable solution for their debt. This is simply not true! Bankruptcy is an honorable and completely legal option for financially struggling Americans to start fresh, providing much needed relief from harassing collection calls. To help clear up some confusion, our firm has put together a list of common bankruptcy myths.

1. “I Can Never Get a Credit Card Again”

Many people believe that they will never again be approved for a credit card once they have filed for bankruptcy. The reality is quite the opposite: many people receive credit card offers almost immediately after completing the bankruptcy process. While access to certain cards will be limited, you will certainly be able to get a low-limit credit card. Using a credit card after bankruptcy is vital to helping you rebuild your credit score and improve your options for future auto and home loans. With that being said, excessive credit card spending is the reason why many people find themselves in financial straits in the first place, making it imperative that you spend with caution.

2. “I Will Lose Everything”

Yet again, this one is false. During Chapter 7 bankruptcy only non-exempt property will be subject to being claimed by creditors. While the exact amount of property you will be able to keep will vary depending on your marital status, a surprising amount of your assets will be off-limits from creditors.

Texas offers generous exemptions during bankruptcy, allowing you to keep:

  • Your home
  • Your retirement assets
  • Your vehicle
  • Your equity in your home
  • Up to two firearms
  • Your clothing
  • Up to $100,000 of personal property

If you are filing for Chapter 13 bankruptcy, you will be able to keep nearly all of your assets. As opposed to the liquidation process of Chapter 7, Chapter 13 bankruptcy involves creating a three-to-five-year repayment plan. An experienced attorney can examine your situation and determine which option best fits your individual needs.

3. “Everyone Will Know I Have Filed”

Despite bankruptcy’s completely legal nature, many people feel ashamed of their filing and are fearful of having anyone find out about their struggles. The only people who will know you have filed for bankruptcy are your creditors, your lawyer, and anyone who you choose to tell. While bankruptcy is a matter of public record, the sheer amount of filings that occur make it so only those who are specifically interested in uncovering your past are likely to discover your filing. Unless you live a life in the public eye, your chances of having anyone find out about your bankruptcy filing are slim.

Contact The Pritchard Law Firm Today

If you are struggling with debt, a highly knowledgeable Fort Worth bankruptcy attorney from The Pritchard Law Firm can walk you through the process of filing for bankruptcy and guide you towards a financially sound future. With more than 45 years’ of combined experience, we can provide the skilled and compassionate representation you need to help you get through this difficult time.

To find out more about what our award-winning lawyers can do for you, call (817) 285-8017 to request a free consultation today!