Category Archives: Bankruptcy & My Credit-Score

How Long Will It Take to Rebuild my Credit after Bankruptcy?

While it is true that filing for bankruptcy is a serious blow to anyone’s credit-report, it is no longer completely true that, after a bankruptcy, it is impossible to rebuild your credit standing within a reasonable amount of time.

For more on rebuilding your credit after a Chapter 7 or Chapter 13 bankruptcy, click here to read our full article on this topic on the new Michigan bankruptcy blog of The Hilla Law Firm, PLLC.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

Is Debt Consolidation a Good Alternative to Bankruptcy?

Many consumers question whether “debt elimination,” which would occur under, for example, a Chapter 7 bankruptcy filing, is a better or worse option with regard to their future credit-scores than “debt consolidation,” a non-bankruptcy-related procedure. The answer is that it depends.

What it depends upon is, first, your current credit standing. A bankruptcy will always be detrimental to your credit-score and will remain on your credit-report for 10 years. However, there comes a point for consumers who have suffered financial set-backs where the impact of a bankruptcy upon their credit-score is not as harmful as lingering in a state of financial decline. This occurs when they have already missed multiple payments, are in arrears on home or auto payments, or possibly have been foreclosed upon or had a vehicle repossessed. At this point, the bankruptcy filing is actually, effectively, an improvement. That is, when you file for bankruptcy and your debt is discharged, you are at least in a state of rebuilding your financial well-being and credit-score rather than treading water in a state of steady decline and suffering incessant collection attempts and late-fee charge application.

Even more to the point, whether debt consolidation is a good option, depends greatly upon the means by which you are consolidating your debt. For the most part, however, debt consolidation is not a good deal for the consumer in need.

There are legitimate credit counseling agencies who provide the pre-bankruptcy petition credit counseling that is required by bankruptcy law. These agencies sometimes recommend a debt management plan, which, for some debtors, may provide a non-bankruptcy solution to their debt management problems. Often, however, such plans are not a good idea as they usually do not reduce the principal owed by the debtor and don’t help with secured debt, such as home mortgages or auto loans.

Worse, there the other “debt consolidators” that debtors considering bankruptcy tend to run into. These are for-profit companies that claim to be able to negotiate with a debtor’s creditors. These companies do not have any legal means of convincing a credit card issuer or other creditor to reduce a debtor’s debt, and, often, they simply take the debtor’s money in the form of a monthly “lump” payment and hold onto it. Very few debtors end up completing the “consolidation” programs offered by these companies, and, in my experience, they often end up being just another creditor listed in the bankruptcy petition when the debtor ends up filing for bankruptcy anyway.

In short, be very careful of which company is offering you a “debt consolidation” plan. For the most part, it is not a good deal and may even be harmful to many consumers, regardless of whether they go on to consider filing for bankruptcy as an option.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

What Happens to Gifts that I Make under Bankruptcy?

Gifts or transfers made in the 2 years prior to filing a Chapter 7 bankruptcy can be extremely problematic, even if made with no intention to defraud anybody and with no idea in mind that you would be filing for bankruptcy in the future.

To learn more, read our full blog post here on gifts in Michigan bankruptcy and what the impact may be upon your filing—and upon your friends and family-members.

If you are a Michigan resident and would like to schedule a free, initial consultation with The Hilla Law Firm to discuss a potential bankruptcy filing, call us at (866) 674-2317 or email john@hillalaw.com to schedule a consultation.

Visit our Michigan bankruptcy website for more information about our firm.