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Irvine Bankruptcy Lawyer / Blog / Bankruptcy / Bouncing Back From a Chapter 7 Bankruptcy

Bouncing Back From a Chapter 7 Bankruptcy


By the book, bouncing back from a Chapter 7 bankruptcy is a ten-year process. Usually, a Chapter 7 filing notation remains on a credit record for a decade. However, in most cases, the rebound process begins almost immediately after people file their voluntary petitions. We stress the “voluntary” nature of a Chapter 7 bankruptcy. No one compels debtors to file. Furthermore, in most cases, a bankruptcy filing looks better than repeated late payments, charge-offs, and other such negative information. People who file for Chapter 7 relief at least did something.

An Irvine bankruptcy lawyer is a valuable partner in both the filing and recovery processes. Experienced lawyers accurately complete the complex filing paperwork in debtor-friendly ways. Non-lawyer bankruptcy petition preparers are basically typists. Lawyers also represent debtors throughout the legal process while pro se debtors are on their own. Finally, lawyers point debtors in the right direction after bankruptcy, hastening the recovery process.

Benefits of Bankruptcy

If it occurs, a credit score reduction is a very small price to pay for the benefits of bankruptcy. These benefits improve your financial situation.

The Automatic Stay is probably the biggest benefit of bankruptcy. Starting from the moment debtors file their voluntary petitions and ending when the judge closes the case, creditors cannot pursue adverse actions, such as:

  • Eviction;
  • Harassing phone calls;
  • Repossession;
  • Wage garnishment;
  • Foreclosure; and
  • Utility shutoff.

In some cases, primarily when the debtor is a serial filer (more than one bankruptcy filing in the last year), the Automatic Stay’s effect or duration may be limited.

Furthermore, bankruptcy’s property exemptions shield your most important assets. Some property exemptions include:

  • Motor vehicle;
  • Home equity;
  • Government benefits; and
  • Personal property.

Property exemptions are unusually complex in California, underscoring the need for a Santa Ana bankruptcy lawyer.

Rebuilding Credit After Bankruptcy

Right off the bat, we should point out that, contrary to popular belief, bankruptcy doesn’t “ruin” your credit. Most filers are in such dire straits that, by the time they file, the aforementioned late payments and other negative entries have already significantly lowered the debtor’s credit score.

So, the filing itself simply makes a bad score worse. Not filing would have roughly the same effect since the parade of negative entries would presumably continue.

Simply paying bills on time raises a score. When paying car payments and other monthly bills, it’s a good idea to add a few dollars to each payment. The additional principal payment saves interest payments later and builds a financial reserve.

Borrowing money is a good idea as well. The waiting period to refile for bankruptcy is almost as long as the credit score waiting period. Since they cannot file for bankruptcy again, many debtors are drowning in credit card offers when they receive their bankruptcy discharge orders.

Your credit score measures your ability to responsibly use credit. Charging something every month and paying the balance before the due date shows this responsibility and increases your score.

Former debtors shouldn’t forget to build savings accounts. Any amount, even $50 a month, soon becomes a large emergency fund. This money often enables families to withstand the next financial storm they encounter.

Reach Out to a Thorough Orange County Lawyer

Regardless of your financial problems, there’s usually a way out. For a free consultation with an experienced bankruptcy lawyer in Santa Ana, contact The Law Office of Charles A. May. The sooner you reach out to us, the sooner we start working for you.

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