We’ve written a series of blog posts answering questions regarding your credit rating and bankruptcy, and their financial impact. Call (262) 827-0375

How Will Bankruptcy Change Your Life? 7 Ways . . .

Filing for bankruptcy is a major decision. The circumstances that lead to the decision are usually not very pleasant either. Whether it’s the loss of a job, a major medical procedure, or simply overspending, overwhelming debt can be a major stressor on you and your family. And once you’ve filed for bankruptcy, your life will change. Here are seven ways that bankruptcy will change your life, and what you can expect.

Waukesha bankruptcy attorneyWhile the final outcome of filing for Chapter 7 or Chapter 13 is intended to be positive, there are negatives that come with it. If you decide to file, here’s the bad news that you can expect:

The Bad

  1. Credit Score
    According to Experian, one of the major crediting companies in the U.S., filing for bankruptcy drops credit scores by an average of 80 points. However, it could be much more depending on your specific situation. This reduction in credit rating leads to less trust from future creditors, which ultimately leads to you paying higher interest rates and fees. The bankruptcy will also remain on your credit report for 7-10 years. However, all is not lost. With a newfound emphasis on paying your bills on time, you may be able to establish a more favorable credit rating in as little as two years.
  2. Credit Cards
    Milwaukee bankruptcy no credit cardsYou may be wondering, how or why you’d get a credit card after bankruptcy. As for how, once you file for bankruptcy there’s a good chance you’ll receive new offers for credit cards. While it may seem odd that credit card companies offer credit to people who’ve previously filed for bankruptcy, there are actually creditors who target this high-risk pool. Why? Because they charge higher interest rates and fees, and with these higher fees it’s profitable for them.While the higher rates can seem overwhelming, the opportunity to reestablish your credit rating is actually a plus. If you’re able to consistently pay off your credit card bill each month, it can help improve your credit rating. However, the last thing you want to do is get caught up in more debt. But if you have the money and commitment to paying your bills in full each month, this can be a good option.
  3. Housing
    Once again, we’re going back to your credit rating… Once you’ve filed for bankruptcy, and your credit rating has taken a hit, it can be difficult to find housing. Simply put, you’re seen as a higher risk. So whether you’re trying to rent a new apartment, or applying for a mortgage to buy a new home, expect that you’ll pay higher fees. That may be in the way of a higher interest rate for a new home loan, or a larger deposit for a rental. Yes this is annoying, but it’s important to understand that creditors are merely trying to protect themselves against potentially not being paid.
  4. Employment
    It’s true that it is illegal for employers to ask you about your credit during an interview. However, employers can legally run a background and credit check on you. This may not be an issue in some industries, but in others, such as the financial services industry, it’s common practice. If you are subject to a credit check, and you sign a release letting a prospective employer review your credit, your prior bankruptcy and lower credit score may make it difficult to land the position. Right or wrong, some employers view low credit as a sign that you’re not very responsible.

This may all sound overwhelming. But now that we’ve got the negatives out of the way, let’s look at how bankruptcy can have a positive impact on you and your family.


The Good

  1. Debt eliminated and stress reduced
    No longer having to carry burdensome debt is a huge relief. Over the years we’ve had clients tell us that after their debt was eliminated, they slept better, were less anxious, were happier, and their family life improved. And despite some the aforementioned downsides of bankruptcy, life following bankruptcy was significantly better. With both Chapter 7 and Chapter 13 bankruptcy, your unsecured debt will be discharged. This includes credit cards, car payments, and medical bills. (However, it does not include some debt, such as alimony, child support, and student loans.)
  2. No more collection calls or lawsuits
    Milwaukee bankruptcy don'tsConstant calls from collection agencies can be extremely stressful. If you’ve ever received these calls, you may have noticed that the collection agents can be very harsh, and even threatening. And the longer you owe creditors, the longer the calls go on for.However, the good news is that once you file for bankruptcy, creditors are no longer legally allowed to make such calls. In addition, creditors are no longer able to sue you, or repossess your possessions.
  3. No one has to know
    Many of our clients come to us with lots of embarrassment about their financial situations. And yes, in some instances, this may be justified. We won’t sugarcoat it. But in many cases, especially in cases involving medical bills and job loss, there’s no reason to be embarrassed. Life happens. Still, most of our clients are concerned about privacy. They don’t want people they know to find out about their bankruptcy.The good news is that your finances are your business. Your family, friends, and co-workers don’t need to find out. You can keep it private. The only time your bankruptcy filing would come out would be if you file for a new loan or credit line.

So there you have it, the good and the bad of filing for bankruptcy. Just remember, bankruptcy isn’t forever. After 7-10 years it’s wiped from your record. If you pay your bills on time following your bankruptcy, you’ll be well on your way to reestablishing your credit.  And in the meantime, you’ll get a fresh start financially and, in all likelihood, be much happier once you file bankruptcy, stop the credit harassment, and have a clean slate for you and your family.

And of course, if you live in the Milwaukee / Waukesha area, and need someone to talk to regarding your financial situation, don’t hesitate to give Burr Law Office a call at (262) 827-0375.

Important Factors in Making a Decision about Bankruptcy

For most people, the decision of whether or not to file for bankruptcy is not one to be taken lightly. After all, there are implications that go along with the decision. Today we’d like to take a look at a few things you should think about and discuss if you find yourself making the decision of whether to file for bankruptcy.

First of all, it’s important to reiterate that everyone’s situation is unique, and there are no “one-size-fits-all” approaches to handling financial matters. Similarly, not everyone is in the same place in life either, and all those factors need to be taken into account when making a big financial decision such as whether or not to file for bankruptcy. Because of the case-by-case nature of bankruptcy, it’s always best to consult a qualified bankruptcy attorney to discuss your options and to explain your specific situation. These attorneys are trained and are experienced and will be able to give you advice based on the information you have given them.

That being said, there are a few things most people can think about when deciding whether or not to file for bankruptcy – these are very common considerations which are likely to apply to many people, despite their different places in life and different situations.

First of all, if you do decide filing for bankruptcy is your best option, you’ll have to determine which type of personal bankruptcy to file. This decision is best made in consultation with your attorney, as each type makes sense in certain situations. Chapter 13 bankruptcy creates a repayment plan in which the filer uses a payment plan to pay off his or her debt in three to five years. This is often chosen if there was a temporary event that caused someone to get behind financially, such as a loss of a job, that has since been rectified. Chapter 13 allows you to keep your assets while requiring you to repay your missed payments via your payment plan.

Chapter 7 bankruptcy wipes away all debt, and this option is often chosen when debt is extremely high or when there is simply not enough income to come up with a payment plan. There are laws requiring being qualified for chapter 7, so this is not always an option for everyone.

Another thing to consider is whether you’ve had a major life event lately. Maybe, completely out of your control, a major medical event, divorce, or loss of a job might have increased your debt significantly or reduced your income significantly. A qualified attorney can help you evaluate your situation and help you decide what your options are.

There is then the matter of considering how bankruptcy will affect your credit. Typically, a bankruptcy will stay on your credit report for about ten years. But, depending on what your current financial situation is, a bankruptcy can actually help improve your credit score in as little as a year or two. If you’ve missed payments and have bill collectors or other agencies reporting your missed payments, getting on a chapter 13 payment plan together and starting to rectify the debts and missed payments can actually help you to boost your credit score. If, however, you have plans to buy a house in the next few years, or if you know you will need an auto loan or need to take out a line of credit, you may want to re-consider bankruptcy unless it is absolutely necessary. It might be very hard to make any of these things happen with a recent bankruptcy on your credit report.

If you have any joint accounts, another thing to consider is how bankruptcy will affect these. While bankruptcy will dissolve your financial obligations, if you have a spouse or someone else on a joint account, that co-signer will now become solely responsible for the debt. This is common after a divorce. One way to avoid this from happening is to pay off the debt before filing or by placing the debt into only one person’s name.

Finally, it is important to know that filing for bankruptcy is a matter of public record. Anyone who is interested can look into this information. Many times, people don’t realize this or bother to look; however, you should be aware that it will be a matter of public record and available for anyone who would want to look into it. Depending on your public profile, this piece of information might help you make your decision.

At Burr Law Office LLC, as expert Milwaukee bankruptcy attorneys, we want to help you make the right decision for your unique situation by taking all the factors into account. If you are considering bankruptcy as an option, talk to us and get the benefit of our expertise and experience. Call (262) 827-0375 today!