Since Utah has always been in the top 5 for States who have the most bankruptcies I thought I would talk about that nasty word and hopefully find another solution.
What are 10 reasons people file for bankruptcy?
1. Eliminate the legal obligation to pay many of your debts.
2. Stop foreclosure on your house and allow you to effectively make payments to catch up on missed payments of your mortgage.
3. Prevent your car or other property from being repossessed.
4. Reduce or even eliminate high medical bills.
5. Recent loss of employment.
6. Stop harassing behavior from creditors.
7. Restore or prevent your utilities from being shut off.
8. Provide help for large amounts of student loan debt.
9. End wage garnishments.
10. Challenge certain claims of fraudulent creditors.
Chapter 13- Referred to as a reorganization bankruptcy. Is aimed at rehabilitating the debtor to allow him to use future earnings to pay creditors with the protection of the government. Usually between 3-5 years.
Chapter 11-It is available to individuals, corporations & Partnerships. There are no limits on the amount of debt like Chapter 13. This is usually for large businesses seeing a restructure of there debt.
Side Note: Bankruptcy can either be entered into voluntarily by the debtor or involuntary initiated by the creditor
The question most people have is how will this affect my credit, and how will I be able to reestablish credit? When you file Bankruptcy your credit score will take a hit. There is no set number of how many points it will be, but over the years I have seen it take over 100 points off the credit score, but it could be more or less. In rebuilding your credit, some lenders might not want to lend to you right off the bat. Some lenders will say you need to wait between 1-3 years after the discharge date before they will lend to you.
Options are out there- The best loan option is to ask for a shared secured or term secured loan. What that means is; you will use your own money to secure the loan for a specific term to reestablish payment history. Most Credit Unions will do this even if the bankruptcy hasn’t been discharged yet. As long as you haven’t filled bankruptcy on them you should be okay. Always ask them first before you assume you can have this type of loan, every lender is different in there guidelines and policies.
Go see your financial institution first before you decide what to do. They might have some options for you that will better your situation. PLEASE don’t wait until its to late to ask for help. If you feel that tight pinch ask for help, that is what they are there to do, is to help you. There are credit counselors out there that say they will help for a price. Why pay that price when your bank/credit union is free. If you do decide to go with a credit counseling company, please be aware that some financial institutions won’t lend to you until you are completely out of that program. It does say on your credit report if you are in the program even if the counseling company says it doesn’t.
I say lets all make Utah the last on the list for bankruptcies
Definitions: The Debtor is you the person who has the debt. The Creditor is the person you owe.