Bankruptcy can protect and help borrowers who are struggling with unaffordable debts. However, there are certain pre-filing mistakes that could hurt your chances of benefiting from bankruptcy. Avoid the following mistakes before your bankruptcy case is filed. Cashing out your retirement savings. Many retirement plans are protected in bankruptcy. It would be a mistake to use your retirement funds to pay off debts that would be discharged at the conclusion of your bankruptcy case. Going on a spending spree. You could get yourself into trouble by racking up new debts shortly before filing your case. Creditors could object to the discharge of the debts. You could be accused of fraud. Repaying family, friends or other creditors first. This is a potentially costly mistake. Repaying one creditor, even a family member, before other creditors could be viewed as preferential treatment. Your family member or friend could be ordered to pay this…
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If you are having problems repaying your federal student loans, then you must take steps to avoid defaulting. After at least 270 days of nonpayment, the Department of Education could consider FFEL and Direct loans to be in default. You could face severe consequences after defaulting that include. Administrative wage garnishment: The Department of Education does not need a judgment to begin garnishing your wages. Once an administrative wage garnishment is issued, a percentage of your pay could be garnished. Fees: Once you default on your federal loans, your outstanding balance and interest immediately becomes due. Collection fees may also add to what you owe. Loss of eligibility to choose repayment options: Programs like REPAYE, which cap monthly payments to a percentage of your discretionary income, may be out of reach after defaulting. Lower credit score: Your servicer will report your defaulted loans to the credit bureaus, which will hurt…
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The information on your credit reports is compiled by the three credit bureaus (Equifax, Experian and TransUnion) to help lenders discover whether you are a credit risk. Your credit reports could show previous and existing loans, late payments, wage garnishments and credit inquiries. These are only a few examples of what might be contained within the reports. If your credit reports show a history of defaulting on loans, late payments or judgments, then it will be much more difficult to access credit. Our entire society runs on credit, so it is important to know what information is contained within your credit reports. Once you have this information, you can contest errors or develop strategies to repair your finances. Fortunately, are owed a free credit report each year from the three credit bureaus. How Does AnnualCreditReport.Com Work? The three credit bureaus operate AnnualCreditReport.com, the only website where you are guaranteed free…
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*Credit card payments will not be accepted for bankruptcy cases, unless pre-approved by The Sader Law Firm. If you have a question about a credit card payment, please call our Office Manager at (816) 561 1818.
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