Bankruptcy FAQ

Q. How does filing Bankruptcy affect my credit?

A.  Bankruptcy will discharge debt and that will help reduce the amount of your debt. Credit bureaus will add this information to your report and will initially lower the "score"  or number under their current system of credit scoring. Lenders use scores to approve credit, but the score is not the only factor in a lender's decision. 

Most lenders require a stable source of income and ability to repay the debt. Collateral, such as a car or home, can also improve your chance of obtaining immediate credit approval after a Bankruptcy discharge. No law — state or federal — prevents a lender from approving your loan after a Bankruptcy filing. Lenders simply make their own decisions based upon their normal lending guidelines. 

For more  information on how credit bureaus score a Bankruptcy filing contact the credit bureaus. Try: www.equifax.com 

For a free credit report go online to: www.annualcreditreport.com

Q. Are credit counseling or debt-management companies better than filing for Bankruptcy?

A. Credit  counseling is now required for all cases prior to filing a bankruptcy. Most companies are charging $50 for the pre-bankruptcy counseling — which can be conducted on the Internet, telephone or in person. In the many years of years of experience for the bankruptcy attorneys at Second Start, we have seen a number of consumers  that have dropped out of credit counseling after only a few months of debt management only to later file Bankruptcy.

We believe that in cases where there is only credit card or medical debts, and need help with negotiating monthly payments, then you can benefit from these kinds of companies' assistance. Most consumers can simply contact the creditor and negotiate directly. The real problem is that a debt-management company is not qualified to determine all the potential legal issues, and whether or not this is your best option considering your monthly budget. Credit scores will still fall due to the type of information your creditors will report to the credit bureau during this process.  

Finally, the secured loans — such as car loans, furniture loans and home mortgages — will not be subject to the debt-management systems, and these creditors will continue efforts to  collect, repossess or foreclose the collateral. Each individual with serious debt problems should consult an experienced attorney to learn about all your legal options, including bankruptcy and non-bankruptcy payment options, prior to signing on with a debt-management company, a business relying on unproven TV ads or annoying pop-up Internet solicitations — which should be avoided!!

Initial consultations with our firm Second Start are free. And we only want to help you in making the best decision for you and your family during this stressful time.

Q. Why do I need to consult a lawyer for Bankruptcy when a typing service will charge less?  

A. Bankruptcy is federal law and very complicated. Only a lawyer that is licensed can provide you with legitimate counsel. These discount "typing services" cannot answer legal questions and don't have the bankruptcy knowledge to advise you on your rights, and all the procedures for filing. These typing services don't know if a bankruptcy filing is the best option for you, and often cause more problems by making mistakes with your papers. 

Your filing is subject to criminal prosecution for false oaths or failure to disclose all the required information. If you are about to lose your home or automobile, the filing of Chapter 13 Bankruptcy can help you keep your property. Attorney fees are paid usually over the next 36-60 months — typically the duration of your case of your and repayment plan — with no costs up front. Typing services, typically, don't process Chapter  13 cases. Keep in mind the law has now changed and the typing service cannot assist you in reviewing your eligibility to file. This may cause your case to be dismissed despite filing a bankruptcy case. This is expensive, and you will still owe your debts.

Q. Can you help with tax debts owed to the Internal Revenue Service or Michigan Department of Revenue?  

A. Yes, the IRS or MDR can be repaid in a Chapter 13 or Chapter 11. Filing Bankruptcy can stop a levy or other collection of the tax debts. In certain cases, some older IRS debts can be completely eliminated by a Chapter 7 discharge.  

Q. Is there a charge to answer any of my other questions not covered on this web site? 

A. NO. Simply go to the Contact Us page and e-mail your questions. You will receive an   answer from a Second Start attorney. You can remain anonymous. No lawyer charges to answer your questions. For emergencies — such as a sheriff's sale, foreclosure, repossession, or wage garnishment, we recommend that you  contact the office for an immediate consultation. 1-800-SAVEDME (728-3363)