Question

From Chapter 7:  What are the advantages and disadvantages of filing Bankruptcy? Under what circumstances do you feel it is OK to file and why?

Also, address how you can improve credit and the steps to take to improve credit standing. Detail please.

Answer 1

Advantages of bankruptcy:

• Filing for bankruptcy will trigger the automatic stay, preventing creditors from taking action to collect their debts, prevent creditors from repossessing property such as cars, and also prevent them from suing you, or sending you letters
• You may be able to discharge your obligation to repay any of your dischargeable debts.

Disadvantages:

• If you are unable to exempt all of your personal property or real estate under the bankruptcy exemptions, some of your property may be seized by the bankruptcy court and sold to pay your creditors.
• Your bankruptcy will be noted on your credit report for 7-10 years.
• Many credit card companies will automatically cancel your credit cards when you file for bankruptcy. You will have difficulty getting new credit cards or lines of credit.

It is ok to file for bankruptcy, for people who have property they want to keep, filing a bankruptcy may be the better choice. It enables people to pay off their debts over a period of three to five years. For individuals who have consistent, predictable annual income it offers a grace period. Any debts remaining at the end of the grace period are discharged.

Steps to improve credit standing :

Steps to raise your credit score

1. Watch those credit card balances: If you have multiple credit card balances, consolidating them with a balance transfer credit card or personal loan could help your score.
2. Eliminate credit card balances: The solution to improve your credit score is to gather up all those credit cards with small balances and pay them off.
3. Leave old debt on your report: Good debt — debt that you’ve handled well and paid as agreed — is good for your credit. The longer your history of good debt is, the better it is for your score.
4. Pay bills on time: One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.