Does Bankruptcy Ruin Your Credit?

27 May 2022

Most people understand that bankruptcy can help you discharge the debt if you’re in a bad financial situation.

They also understand that bankruptcy can hurt your credit score. But can bankruptcy ruin your credit entirely?

The Importance of Talking With an Expert

First, if you’re considering filing for bankruptcy protection, make sure you talk to a bankruptcy lawyer. A bankruptcy lawyer will have the knowledge and expertise necessary to help you determine whether filing is appropriate for you and which type of bankruptcy you should pursue.

They’ll also help you understand the core process of filing for bankruptcy and setting your expectations for timelines, costs, and consequences. Lawyers are an indispensable resource here, so don’t neglect to hire one.

Different Types of Bankruptcy

You should also understand that there are different types of bankruptcy. Different types of bankruptcy manage debts in different fashions and have a different impact on your credit score.

For example, Chapter 7 bankruptcies tend to stay on your credit report longer than Chapter 13 bankruptcies, due to the fact that Chapter 13 bankruptcies frequently allow consumers to pay back a portion of their debts.

A chapter 13 case could benefit a person for numerous reasons. Typically, a person would file a chapter 13 case to save a house from a mortgage foreclosure action and a car from repossession, due to payment arrears.

A person may also file for chapter 13 protection to pay back only a portion of unsecured debt because they do not meet the chapter 7 criteria. Chapter 13 requires a person to make monthly trustee payments for 36 to 60 months. A chapter 13 case is completed after all monthly plan payments have been paid in full.

Chapter 7 bankruptcies allow an individual to eliminate all unsecured debt, such as credit card debt and personal loans. Therefore, a person who is only interested in eliminating unsecured debt would file a chapter 7 case, if one meets the criteria.

The chapter 7 case takes about four months to complete after the filing. No payments are required in a chapter 7 case.

The Impact of Bankruptcy on Your Credit

A chapter 13 bankruptcy filing stays on a credit report for 7 years from the date of the filing. A chapter 7 bankruptcy case, stays on a credit report for 10 years from the bankruptcy case filing date.

Typically, filing for bankruptcy has a negative impact on a credit score, although the filing may increase a person’s credit score, based on their financial circumstances.

The most important criteria impacting the credit score are as follows:

The shorter the credit history the less advantageous it;
Missing payments reflect a derogatory mark;
The amount of one’s revolving credit limit compared to the amount of the debt incurred.

The optimum debt to credit limit ratio is a debt balance of 30% of someone’s credit limit. The additional debt incurred over 30%, the more the credit score is negatively affected. For example, a person that used $3k of their total $10k credit limit has used 30% of their total credit limit. However, if the same person charges a total of $6k of the $10k credit limit, the ratio is increased to 60%, which reduces the credit score.

A person’s credit report lists their creditors and other facts regarding each creditor. This includes the status of payments; type of loan; length of the loan, and the loan balance. Typically, a credit report also reflects a bankruptcy filing, foreclosure action, repossessions, charge-offs, and debt settlements. The credit report also reflects a total score, indicating the general state of a person’s credit.

A prospective lender must analyze a person’s financial circumstances to determine: if they will issue the loan; what type of loan will be issued; the loan amount; the loan interest rate; and, the length of the loan.

Based on each creditor’s internal lending requirements, the determination of extending credit is based on a balancing act between the loan applicant’s credit report, income, expenses, the debt amount, debt payments, assets, and other information.

Typically, a person considering filing for bankruptcy protection is experiencing difficulty paying their monthly credit card payments and/or mortgage or auto finance payments. Consequently, such a person usually has a low credit score. The lower the credit score at the time of the bankruptcy filing, the less the impact the bankruptcy filing has on a credit score. Conversely, a bankruptcy filing will have a substantial impact on a person with a high credit score.

In general, a high credit score does not always guarantee that a person will obtain the loan they want with the best terms. A prospective debtor with an excellent credit score and substantial monthly credit card payments may experience difficulties, without filing for bankruptcy. What if a person with an excellent credit score has a very low income?

Let’s assume that a person with a high credit score, with substantial monthly debt payments, eliminates all credit card debt, in addition to other types of debt in a chapter 7 case. Initially, the person’s credit score will sustain a substantial hit, resulting in difficulty obtaining any loan.

However, within a reasonable time period, together with the proper credit repair, the person’s credit score will substantially increase. In the future, the person will apply for credit without their enormous monthly debt payment load.

Now, let’s assume that a person with a low credit score and substantial monthly debt payments eliminates all credit card debt, in addition to other types of debt in a chapter 7 case. Initially, the person’s credit score may sustain a minimal hit.

However, most likely this same person was experiencing great difficulty obtaining credit prior to the filing. If this person implements the proper credit restoration process, the person’s credit score will substantially increase, as well. Ultimately, within a short period, the bankruptcy filing will likely increase this person’s ability to obtain credit

Typically a bankruptcy mark on a credit report has a negative impact on prospective creditors to review. Generally, within one year after the completion of a chapter 7 case, the debtor (the person that filed) will experience great difficulty obtaining a loan.

Although obtaining a loan depends on the totality of the person’s financial circumstances, the rule of thumb for receiving automobile financing with a reasonable to low-interest rate is about one year after the completion of a chapter 7 case. The rule of thumb regarding the receipt of a reasonable to low mortgage rate is about two years after the completion of chapter 7.

Based on a debtor’s financial circumstances, she may be able to obtain automobile financing and/or a mortgage during the chapter 13 case. Otherwise, the same rule of thumb applies to a chapter 13 debtor as a chapter 7 debtor regarding obtaining a reasonable and low-interest rate after the case is complete.

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Sumona is a persona, having a colossal interest in writing blogs and other jones of calligraphies. In terms of her professional commitments, she carries out sharing sentient blogs by maintaining top-to-toe SEO aspects. Follow more of her contributions in SmartBusinessDaily

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5 Fun Facts About The American Eagle Gold Coin

As the official bullion coin of the U.S., the gold American eagle coin is sought-after by investors and numismatics. These consumers are intrigued by the coin's all-American precious metals, the reputation of the coin, and the intricate, detailed design. The interest in collectors for this coin is also due to being one of the top-selling billions in the country.Serious investors also want to know that they are putting their money into an investment they can count on. Security of investment is a given with American gold eagle coins, as they are the only coins officially backed by the U.S. government. The guarantee eradicates concerns over the coin's validity in value, which tells investors they are truly getting what they pay for.With guaranteed quality control, investors and numismatics never need to worry about their investment's content, purity, weight, or quality of metal. With these facts secured, the investment is set to be used as legal tender or secured as an asset. While the legitimacy of the coin is the most crucial fact about the American Eagle gold coin, here are five additional fun facts to note.1. The American eagle gold coin is more scratch-resistant than gold buffalos.The polished surfaces and keen attention to detail are showcased on American eagle gold bullions; their beauty adds to the investor and numismatic interest. Since the American Eagle gold bullion contain 10% copper and silver alloys, it is notably more scratch-resistant than its counterparts, 24-karat Gold Buffalos. Additionally, the U.S. Mint tailors coin production to meet the aesthetic appeal of collectors.2. There are more opportunities for creative collection display.Collectors interested in placing their coins into a portfolio may wish to display their collectors' coins in a unique and creative way. For instance, some collectors may arrange coins based on historical significance, others by type or style. With the American eagle gold coin, you can also organize your portfolio by coin similarity.For example, the Gold Eagle is similar in design to the Double eagle gold coin. On both coins, Lady Liberty and an American eagle are displayed. Additionally, both indicate the currency value and mintage dates.3. The gold is sourced by the U.S.All Gold Eagle coins are produced with gold sourced only from the U.S. The coins may not include metal from unknown or foreign sources during the minting process. As a legal requirement, these specifications are not to be altered for any reason. For collectors looking to invoke patriotism and American pride into their collection, the American Eagle gold coin is a wise investment choice. American-derived gold is of significant historical influence as well for collectors or investors interested in obtaining a piece of American history.4. The coin value will always remain what it is. No matter if the price of gold decreases, the American Eagle gold coin retains the value that is minted onto them. Each coin has a face value from five to fifty dollars of legal currency. Regardless of changes in currency, the coin value is maintained, making Gold Eagles a wise investment for those looking to add tangible assets to their portfolios.Likewise, collectors looking to compile assets to pass on can achieve peace of mind knowing that the American Eagle gold coin will not depreciate in value, no matter how much time goes by or how American currency changes over time.5. These coins offer the historical significance of legal tender.Some collectors and investors want to purchase coins that offer historical significance. Interest or appreciation for rich American history can be acknowledged by purchasing a Gold Eagle coin. The first Gold Eagle was introduced in 1986 in response to the Gold Bullion Coin Act Of 1985. The act recognized the value of gold coins with legal currency and precious metals. The American eagle gold coin is the established, official U.S. gold bullion.Invest in coins with permanent value and lasting significance.The American eagle gold coin offers numismatics and investors the opportunity to establish a balanced investment portfolio or collectors' portfolio. As a protected coin, devaluing currencies are not influential, allowing collectors to preserve their coins and maintain their value for future investment opportunities and generations to come.Read Also:Can I Convert My 401k To A Gold IRA?Starting Your Rare Coin Collections: A Beginners Guide to the 1794 Flowing Hair Half DimeBitcoin’s 10th Birthday: Does Satoshi Nakamoto’s White Paper Still Hold Relevance?

How to Get Low Cost Life Insurance for Seniors

One can clearly understand the requirements of a senior citizen who is willing to buy a life insurance policy even at this late stage of life. They have their own reasons of security, family burden, and responsibilities such as debts, burial expenses, etc. Most of the life insurance companies very well understand these requirements. Due to the rising demand for life insurance by the elderly people they have come up with several policy options for senior citizens at several stages of life even after 80 years.Life insurance companies will never try to risk their own business. This is one of the prime reasons that insurance policies for elders are often very expensive. However, there are a few methods that can help our senior citizens in lowering the cost of life insurance. Consider Group Investment Plans Seriously Depending on your age, if you are still in a job, then consider every group investment plan that is offered by the companies to their employees. Most of such plans come along with some retirement benefits. So, if you haven’t availed any of these plans yet, consider them seriously now. If you are expecting your retirement anytime sooner, these plans can be one of the best investments that will go along with you as your retirement gift.Such plans can be easy to avail because the company itself becomes the guarantor for its employees and the insurance companies do not mind getting bulk of customers on a regular basis. What Are You Risking? Insurance policies for senior citizens are often very risky especially when they try to gain too much of it. The reason for being their own life expectancy and medical condition are not at their best. This matter puts them on the risk side for the insurance companies. Therefore, they should buy a policy that doesn’t cover too many aspects. For example, some people want “good returns” as well as “lower premiums”. It is always better to expect less and cover less too.Lesser is the risk covered, lower will be the cost of insurance.The best way is to priorities your needs for insurance. Opt for policies with a medical examination and full check-up: If you are a healthy senior citizen (as per the parameters of your age) then try to opt for policies that include a complete medical examination. Some people often try to run away from the hassles of running around for medical examination certificates that are demanded by the insurance companies. It urges them to opt for “no medical exam policies”. Although such options provide you with the comfort you have to pay some price for it.Instead, if you opt for a regular insurance plan, you will have two benefits-The cost of insurance policy will be reduced You will have a free medical check-up and consultation as most of these medical exams are conducted by the insurance companies on their own.Cooperate with the companies for the waiting period: Often it has been noticed that elderly people want things to happen quickly especially after a certain age. This makes them impatient and they do not want to wait for the time that is taken by the companies in the process of documentation and filing. When they urge the companies to provide them with some faster policy option, the company agents suggest them to buy “no waiting period” policy. This is again not going to give any other premium or policy benefit except that it will cost you higher at the time of purchase and fasten up your process of documentation.If one can afford, then they should let the companies take their time as they take care of hundreds of cases at the same time. The clients can save on the extra cost here and show some patience towards the whole process of the insurance application. Last Words The best way to avoid any such chaos is to take the decision of buying the insurance much before then you actually need it. If you have ample time in hand, you will be able to save on a lot of extra cost as a senior citizen.

7 Reasons Why Teenagers Pay Extra For Car Insurance

Car insurance for teenagers is more expensive than experienced drivers. Teenagers, who are at a very young and vulnerable stage of life, often lack any formal driving experience. They learn the skills of driving in this age and polish it with practice. The motor vehicle associations understand the susceptibility of their age and therefore the cost of car insurance for teenagers is higher.In order to understand this concept in detail, we have laid down 7 reasons that “why teenagers pay extra for car insurance”: No Proven Track Record of Driving The insurance companies consider the driving history of the applicant before issuing insurance premiums. In the case of teenagers, there is no proven track record of driving. Since they are at the beginner’s stage of learning, there is no evidence to support their expertise on the road. The risk factor stays high in this case.In general, the people who have proven driving track record without any mention of traffic violations and accidents in their names can avail significant discounts on their car insurance policies.The insurance companies need some statistical proof to make a judgment about the driving skills of applicants- which is not possible in the case of teenagers. Therefore, they cannot assume whether the teenage driver is a safe or reckless driver.In order to cover their risk, they raise the cost of car insurance for teenagers to ensure some safety measures. However, at the age of 19, the insurance plan becomes affordable as you already have 1-2 years driving experience by this time. You can get car insurance here for 19 years olds. Lack of Experience It takes time in learning a skill and achieving expertise in it. Learning to drive certainly takes more time and effort as we face different situations every day on the road. The young drivers need to dedicate a lot of practice hours to polish their skills before they can take their own vehicle independently on the road.The amount of time spent behind the wheel is a considerable factor in enhancing the driving abilities of young drivers. In the case of teenagers, their lack of experience can put them to test while facing real-life driving situations. Their reaction time may be slower than an experienced driver which is much needed when you are in actual driving practice.It is often seen that the young drivers get into a panic very easily when they face unusual situations on the roads. There are research studies to support the fact that most of the accidents that involve youngsters are due to their delay in reaction to the situations that prevail. Emotional Distraction Young people often get stuck with emotional issues. Their vulnerable age often brings out the “rebellious” attitude which may result in anger, sadness, extreme happiness, excitement, overreaction, anxiety, etc. They have very less understanding of dealing with their own emotions which may cause serious troubles while driving.For example- despite many public advertisements, youngsters use their mobile phones while driving. The overconfidence can lead to the accident-prone situation very easily.Youngsters often pool their vehicles and go for diving expeditions. Mutual talking and discussions while driving can distract their attention from the road. It is also common for youngsters to appreciate unusual sights on the road and get diverted from their driving spree.Insurance companies take these facts into account and use substantial proofs to put forth their risk level before issuing car insurance to teenagers. Increased Tendency Towards Speed and Racing There is no denial of the fact that teenagers love formula races and speed games. When they sit behind the steering, they get tempted to race with the cars on their track. Sometimes they have their own bunch of friends racing while driving.The scientific studies have reported that teenagers are easily aggravated by smoking, drugs and alcoholic tendencies. Under the influence of these factors, they may be instigated to adopt risky behaviors while driving. The understanding of the risks and their implications can be attained only with age and experience.The insurance companies state that the lower rates of premiums for the experienced drivers are supported by the statistics that prove that they are less prone to accidents as compared to teenage drivers. The Risk of the Insurance Companies The teenage drivers are at a higher state of financial risks for the insurance companies. The higher the probability of being at risk of accidents raises the probability of higher expenditure of the insurance companies. Therefore, in an attempt to cover the risks associated with the young drivers, they raise the cost of the policy. The Statistical Proofs We have already discussed various factors that may cause teenagers to become riskier while driving. It should be mentioned that our studies are based on statistical findings from various reports. These reports emphasize the high probability of teenage drivers being involved in road accidents. The data has been collected by the years of research that bring the car insurance firms at a higher edge of risk. The Make and Model of the Vehicle We often get to hear that the teenagers are gifted their “favorite vehicle” on their birthday or any other occasions. Although this practice is popular in rich and affluent families, these days even the middle-class segment has roped into the trend. Thanks to the easy loaning facilities!However, parents often forget about the risk associated with allowing teenagers to drive new and expensive cars with high-speed parameters. The insurance companies charge more from their clients who want to purchase insurance of a premium car for their teenager ward.The reason is clearly stated- higher speed parameters of the vehicle are directly proportional to the high financial risk factor of insurance companies. Conclusion Teenagers pay extra for car insurance due to the high amount of risk associated with their age and the levels of maturity. There are facts to support the rash driving incidents leading to fatal accidents in many cases that involve teenagers.Therefore, the higher rates of insurance are just a precautionary measure by the insurance companies. They intend to ensure that the applicant, as well as the company, must be fully prepared to deal with the possible risky outcomes due to driving errors. Higher is the risk of the insurance company, higher is the cost of the premium.Read Also : Tips For Reducing Car Insurance Costs Tips To Lower Your Insurance Costs

Does Bankruptcy Ruin Your Credit?

The Importance of Talking With an Expert

Different Types of Bankruptcy

The Impact of Bankruptcy on Your Credit

B Corps Vs Public Benefit Corporations: Understanding Ethical Investing

What Is A Pay Stub?

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Sumona

Sumona is a persona, having a colossal interest in writing blogs and other jones of calligraphies. In terms of her professional commitments, she carries out sharing sentient blogs by maintaining top-to-toe SEO aspects. Follow more of her contributions in SmartBusinessDaily

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5 Fun Facts About The American Eagle Gold Coin

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Does Bankruptcy Ruin Your Credit?

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Sumona is a persona, having a colossal interest in writing blogs and other jones of calligraphies. In terms of her professional commitments, she carries out sharing sentient blogs by maintaining top-to-toe SEO aspects. Follow more of her contributions in SmartBusinessDaily

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