Filing bankruptcy may seem like a traumatic event that will effect your lifestyle for a very long time, but the reality is quite different. Once you have filed bankruptcy and the case is closed you essentially have a clean slate. You have no credit to speak of and need to rebuild it. If you have school loans those can help you rebuild your credit score since they usually are not be discharged under bankruptcy. The next step is to pull your credit and make sure everything is accurate and clean up what isn’t. Many time you will still have creditors reporting that you have not paid bills, even though they were discharged in the bankruptcy. Once you have done this it is time to look at getting secured credit with a credit card. You simply deposit at least $200, or as much as you can at a bank and they will give you a card. You don’t want to charge more than 30% or so of your credit limit, and you want to pay the balance off in full each month. Light, regular use of a credit card is what helps build your credit.

Lastly, you can purchase a car and begin to build credit this way. You will likely pay a tremendous amount of interest for the first couple of years, but you can then refinance or buy another car at a much more reasonable rate if you have been paying your bills on time. Essentially, when you file for bankruptcy it is important to work on rebuilding credit immediately. Once you have started this process you will be able to get normal rates within a few years.

If you are considering filing for bankruptcy and are not familiar with the new laws then you need to study up. There have been several changes that can impact your ability to file and what assets are protected. There is a also the a new test called the “means test” which will determine if you have too much income to file Chapter 7 Bankruptcy. You will instead have to file Chapter 13 Bankruptcy and pay back part of the loan.

Your lawyer is required by law to attest that the information you have presented is accurate. This means that he will have to spend time verifying the data presented to him.

Property values have also changed with the new laws. They are no longer valued at fire sale prices but rather replacement value. This means that debtors are going to look at taking items that are worth more to them. If you are planning a chapter 7 claim then you must have lived in your state for the last 2 years. If you are planning on claiming a homestead exemption that number can go to over 3 years. You’ll need to check your state laws.

Wondering if you can get a student loan after bankruptcy? Sure you can! Actually, the bankruptcy code provides that no governmental unit that operates a student grant or student loan program and any entity engaged in business that includes the making of loans guaranteed or insured under a student loan program may NOT deny a student grant, student loan, loan guarantee, or loan insurance to a person who has filed for bankruptcy or is currently involved in an ongoing bankruptcy case, whether it be a chapter 7 or chapter 13 bankruptcy [11 USC Section 5259(c)].
So what exactly does this mean? It basically means that as long as you are applying for a student loan (financial aid) through a federally insured lending program (FASFA) and you otherwise qualify for aid, you can not be denied a student grant or student loan just because you have file bankruptcy or are currently involved in a bankruptcy case.

Credit CounselingWith the new bankruptcy laws you must take a credit counseling course during the preceeding 180 days before filling bankruptcy. This must be done with an approved nonprofit counseling agency either individually or with a group. This includes a session conducted over the telephone or the Internet that outlines the alternatives to bankruptcy and must help you perform a budget analysis.

During the meeting you will discuss the means test and whether you qualify to file for bankruptcy.The average length of the counseling session is 90 minutes. The counseling can be held in person, over the phone, or on the internet.

Under the new bankruptcy law, if you want to file bankruptcy, you and your income must go through a mathematical test known as the “means test.”  This means test is computed by the Federal court system to determine if you are eligible to file bankruptcy.
The Federal government created this test to keep people from over abusing the bankruptcy system by filing when they don’t have to.  The presumption is that if you fail the means test, you are trying to abuse the system.  This test can also determine whether you can file for Bankruptcy.

When the court is considering whether or not the person is eligible for bankruptcy, the person’s monthly income, when reduced according to the law, and multiplied by 60, has to be greater than 25 percent of you unsecured debt or $6000 if the 25 percent is less than $6,000, or it must be greater than $10,000.

Bankruptcy Lawyers will have this test to determine if you are eligible to file for bankruptcy. You can contact one via our form.

When you are considering filing bankruptcy you need to keep in mind that there is a cost associated with the process (court filing fee). In an effort to cut down on repeat filers the US Government raised the fee from less than $199 dollars to $274 for chapter 13 filings and $299 for chapter 7 bankruptcy filings. The thought process was that this would reduce the number of people who file bankruptcy frequently to get out of paying debt. The reality is that this large sum has made it more difficult for a person who really is having a hardship to file for bankruptcy.

You must also pay Attorney’s fees which can cost around $1000 - $2000 for a chapter 7 filing and anywhere from no up front fees to $2000 or more got a chapter 13 bankruptcy filing. Additionally, prior to and after filing you must take credit counseling at $50 a pop (free for the unemployed).  Essentially if you are considering bankruptcy you need to speak to a lawyer and start to plan for it.