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Santa Rosa Bankruptcy Blog

What really happens to a credit score after bankruptcy?

Bankruptcy is not something to rush into, especially if there are other options available to you. However, if you have exhausted your alternatives and your creditors refuse to negotiate, you may feel you have no choice but to file for bankruptcy to find relief from your debt burden. Like many in California, you may be wondering how this step will affect your credit rating.

Any agency that extends credit will look at your credit history. While you may vow never to return to this place of financial struggle and frustration, at some point, you may want to consider buying a home or car. A good credit rating will be important, and you may hesitate now to seek the relief you need because you fear a bankruptcy can damage your credit score.

Options when facing a lawsuit for credit card debt

If you have reached a point where you are not able to pay your monthly credit card bill, you may have done what many California consumers do: ignore it. You may have stopped opening the envelopes that come in the mail to warn you of the consequences for delinquency or answering the calls demanding payment. Now you are in even more of a bind because the credit card company has filed a lawsuit against you.

Ignoring demands for payment may be one of the worst decisions you can make when you are behind on a bill. Often, creditors are willing to negotiate because they would rather have some of what you owe them than none at all. If you find it difficult to communicate with a credit card company, you can enlist the assistance of an attorney who has experience dealing with creditors and may be able to work out an acceptable resolution.

You don't have to take a collection agent's abuse

More than likely, you are already aware that you owe a particular creditor money. You certainly don't need someone calling you about it multiple times a day or a week to remind you and demand payment. If you had the money, you would have already paid the bill if even just to stop the phone calls.

Many debt collection agents are just doing their job, but some go well beyond what the law, and perhaps human decency, allows. When you are unlucky enough to encounter one of these agents, you may be relieved to know that you don't have to put up with that kind of abuse.

Millennials struggle with medical debt

Are you ignoring that strange pain? Have you opted to suffer with your symptoms rather than refill a prescription? Are you postponing a medical screening or checkup? If any of these risky decisions is the result of your financial struggles, you are not alone. If you are between the ages of 27 and 45, you may be among millions in your age bracket who have outstanding medical bills.

Medical bills are reportedly the most frequent expenses to go to collections. However, it is not uncommon for those with medical debt to also have other overdue bills, such as credit cards and mortgages. In fact, you may have no choice but to pay for a doctor visit with a credit card or risk letting your car payment go to collections to cover the medical expense. This places you and many of your generation in financial crisis mode.

Do I need to file bankruptcy? Can't I just consolidate my debts?

When you find yourself in a financial pickle, you tend to look at all the debt relief options that are floating around out there. With a quick Google search, you'll find a number of companies in California that offer debt consolidation or debt settlement services. You may even read a bit about bankruptcy. What is the best option for you?

You, like most people, may view bankruptcy as the worst thing that you could do, so you put it out of your mind. You focus on debt consolidation, thinking if you could just lower your monthly payments, you'll be just fine. Here is the truth about your debt relief options.

I filed for bankruptcy once, can I do it again?

You, like many other California residents, found yourself in significant debt thanks to job loss, medical bills or a number of other reasons. You filed for bankruptcy, hoping it would be the answer to your fiscal problems. You received approval, but you are still struggling with debt. Now what?

Bankruptcy, in any of its forms, may offer some debt relief right off the bat. You may even feel like you are doing alright a few years down the line. Unfortunately, life likes to throw curve balls, and despite your previous bankruptcy filing, you find yourself dealing with monetary issues again. Did you know you may be able to file for bankruptcy again?

Should you wait until after the divorce to file bankruptcy?

Financial troubles and divorce go hand-in-hand for many California couples. In fact, disagreements about money still rank high on the list of why people decide to end their marriages. Often, the divorce only rectifies some of those issues and may even create others. For this reason, you may be among many people who realize filing for bankruptcy may provide a better chance at financial stability in the aftermath of the divorce.

However, should you file for bankruptcy first or file for divorce first? You probably won't get a simple answer to that question since numerous factors go into making that choice. It depends on your situation.

Is your credit card debt drowning you?

Perhaps you have had a credit card in your wallet since you were a senior in high school. Maybe you took one with you to college just for emergencies and were amazed at the ease with which you could make purchases — paying for pizza, treating friends to beer or getting new clothes for your first internship.

Now that you are responsible for larger expenses and perhaps a family, you understand how reckless you were to charge your whims without a thought about how to pay for them. Your credit cards have come in handy over the years for unexpected expenses, such as car repairs or medical costs. They have also helped your family enjoy much-needed vacation time. However, you are seeing signs that your credit card debt is out of hand.

Are you experiencing harassment from debt collectors?

California readers know there are many negative consequences to owing a significant amount of debt. One of these downfalls is the constant contact from creditors and debt collectors who are trying to collect on owed payments. They can call you, send you mail and make other efforts to communicate with you. However, this only adds to the stress of your overwhelming financial situation. 

If you are dealing with constant contact with creditors, it is possible you are experiencing creditor harassment. While debt collectors do have the right to attempt to collect money, there are limits to what they can do. As a consumer dealing with debt, it may be beneficial for you to learn more about your rights.

Should you offer the IRS a compromise?

Living in a California county where housing costs and other living expenses are high can be challenging at times. For instance, if you're used to living on two full incomes, then you or your spouse loses a job, your entire financial foundation may suddenly be on shaky ground. Even if you're both still employed, an unexpected matter, such as urgently needed medical care or a family crisis, can throw your finances out of whack so that you have trouble paying what you owe the Internal Revenue Service for taxes. 

The IRS won't forget that you owe payment on a tax debt. If you can't find a way to pay your taxes in full, you might want to consider an offer in compromise. While the IRS is often hesitant to accept such an agreement, there are times when it may be the most viable solution. An OIC allows you to pay back less than what you owe. Support is available to help you determine if an OIC might be a better option that filing for bankruptcy. 

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