If you are currently dealing with massive debt and bad credit, you might wonder: is Chapter 7 the answer? Can it help me get out of debt and improve my credit score? The answer is more complicated than you might think. Keep reading to get the facts and then contact The Law Offices of Paul Y. Lee at 888-748-0025 for a free consultation with an experienced bankruptcy attorney.
It Might Be the Quickest Way to Reestablish Your Credit
It can be frightening to file for bankruptcy when you know that it will affect your credit score for years to come. However, if you currently have a bad credit score and are carrying a lot of debt, then you are going to have to make significant changes to improve your score and get rid of that debt. Chapter 7 can help you do both.
Chapter 7 is Not the Right Answer for Everyone
It is important to know that not everyone qualifies for Chapter 7. You must qualify within income requirements. You might have to sell property you want to keep in order to pay your creditors. That said, many of the reasons people are worried about bankruptcy are not based on reality. For example, while you might have to sell some property, California bankruptcy law includes many options to keep it.
Your Credit Score Will Go Down if You File Bankruptcy
Yes, in almost all cases, if you file for bankruptcy your credit score is likely to go down in the short-term. It is also true that the bankruptcy might be on your credit score for as long as ten years. However, how much will your score go down if you do not file for bankruptcy and instead continue to rack up debt and miss payments?
Negotiating with Your Creditors is Not as Easy as Some Make it Seem
We often see companies promising that they can negotiate better payment options with your creditors. The truth is that if you are currently paying the minimum balance every month, your creditor is not likely to negotiate for a better deal. Why? Because you are their dream borrower – you carry a balance and pay every month.
However, if you are in debt, then you might be able to get them to agree to a lower payment or even a lumpsum settlement. Note that both of these solutions still require you to pay on something you currently cannot afford, and they will show up on your credit score.
For these and other reasons, it is often true that filing for Chapter 7 is the fastest and easiest way to start a positive credit journey. To learn more, contact The Law Offices of Paul Y. Lee at 888-748-0025 for a free consultation.