Bankruptcy Can Give You a Fresh Start

As the old saying goes, “If at first you don’t succeed, try, try again.” Without the privilege to file for bankruptcy, many famous and accomplished individuals and businesses would have been deprived of the opportunity to try again and succeed.

Abraham Lincoln declared bankruptcy after failing at an attempt to open a general store in 1833. He went on to become our greatest president.

P.T. Barnum filed for bankruptcy protection in 1856 after defaulting on a bad loan he guaranteed for a friend’s business. He regrouped and formed the world renowned Barnum and Bailey’s Circus.  

William McKinley, then Governor of Ohio, due to a defaulted business loan he co-signed for a friend, filed for bankruptcy in 1883 – three years later he was elected our 25th president.

Mark Twain went bankrupt in 1894 over a failed attempt to publish his own work (because he disliked his publisher), along with a bad investment in an automatic typesetting machine that never came to fruition. It did not stop him from success.

Henry Ford filed for bankruptcy in 1896 after failing at his first venture, the Detroit Automobile Company. He later filed again after failing at his second attempt – the Henry Ford Company. Finally he succeeded in creating the Ford Motor Company.

Walt Disney filed for bankruptcy in 1923 when his first animation company failed. He was given a fresh start and, with help from his family, he succeeded in forming Walt Disney Studios where, in 1928, Mickey Mouse was born. The rest is history. 

Dozens of accomplished individuals filed for bankruptcy, including Mickey Rooney, Willie Nelson, Francis Ford Coppola, Oscar Wilde, Burt Reynolds, and Nicholas Cage, to name a few.

At the Law Office of Thomas Denny, we believe everyone deserves a fresh start. If financial burden is holding you back from living your life to its fullest call Buffalo bankruptcy lawyer Thomas Denny. He will personally assess your situation and guide you in the right direction. His fees are affordable and he takes pride in knowing he has helped each of his many satisfied clients achieve a fresh start.

For a FREE CONSULTATION call (716) 800-1234.  

What is the difference between a Chapter 7 and a Chapter 13?

In short, Chapter 7 is used to wipe out credit card balances, medical bills, personal loans, and other unsecured debts. Filing a Chapter 7 will initially stop all collection actions, including repossession and foreclosure. However, secured creditors (mortgage companies, auto loan creditors) may ask the court for permission to foreclosure or repossess after notice and a hearing. Chapter 7 may be filed by any individual or legally married couple whose household income does not exceed the median income in his or her area.

Chapter 13 is generally used to prevent foreclosures or vehicle repossessions. If your home or other real property is being foreclosed on by your mortgage lender, filing a Chapter 13 will stop the foreclosure and allow you to pay your past-due mortgage payments over 3-5 years, along with any other debts you may have. It will also stop your vehicle from being repossessed and allow you to pay the balance over 3-5 years.

Chapter 13 is also used by debtors who are ineligible to file Chapter 7 because they exceed the maximum income allowance, or the value of their property exceeds exempted values permitted by state or federal law. Any individual or married couple whose unsecured debts do not exceed $419,275 may file a Chapter 13. Payments can range anywhere from 5% to 100% of your total unsecured debt. When the plan is completed, the unpaid balances can be wiped out.

Can Bankruptcy stop foreclosure?

Loss of a job, divorce, medical emergencies and predatory lending practices put many at risk of losing their homes. Every year I help rescue dozens of families from the perils of foreclosure. In my experience, I have learned that the first mistake not to make when in danger of losing your home is to rely on the bank. Although it is required by both federal and state law for lenders to make a good-faith effort to provide options to homeowners facing foreclosure, the truth is most banks and mortgage companies have neither the resources nor the incentive to help you. Despite what they may promise, banks rarely resolve or refinance loans for borrowers who are already in default on their mortgages.

Fortunately, the law provides a way to stop foreclosure. It is Chapter 13 bankruptcy. Filing for Chapter 13 bankruptcy stops the foreclosure process and allows you to repay past due mortgage payments over either a three-year or five-year period. In a Chapter 13 bankruptcy, you can catch up on your back payments while you continue to make your regular mortgage payments.

In New York State, the average foreclosure process lasts approximately 15 months from the date of the missed payment to the sale of the home at auction. Filing for bankruptcy protection stops the foreclosure at any stage up until the auction. Although you may have ample time to stop a foreclosure, the longer you wait, the more difficult it will be to catch up in a Chapter 13 plan.

For a free consultation to find out if you are eligible for Chapter 13 bankruptcy protection, call Buffalo foreclosure attorney Thomas Denny at (716)800-1234.

 

How long does a bankruptcy stay on your credit report?

While a Chapter 7 will remain on your credit report for ten years and a Chapter 13 for seven years, bankruptcy is not necessarily a death sentence to your credit. In fact, it usually raises your credit score.

As a bankruptcy attorney, I use a credit report that indicates a client’s current credit score, along with what that credit score will be in approximately one year after filing. In most cases, scores increase an average of 125-140 points. The rare exception is the client who has never been late on his or her payments. The majority, however, are in default on all or most of their debts when they file for bankruptcy.

The fundamental reason bankruptcy raises your credit score is that it lowers your debt-to-income ratio. To calculate your debt-to-income ratio, you divide your debt payments by your gross monthly income. The lower your debt-to-income ratio, the more willing creditors are to lend you money. Since all or most of your debts are discharged, after bankruptcy, you have more disposable income to pay new debts. The fact that bankruptcy can improve your credit may explain why bankruptcy filers often get offers for credit cards and car loans within weeks after their cases are closed.

Credit is not indicative of your character or worth. It is simply a measure of your ability to borrow money, i.e., incur new debt. Bankruptcy is intended to give debtors a fresh start by freeing them from the burdens of debt. Thus, it puts them in a better financial position – one in which they may not have to continue to borrow money to make ends meet.

To find out if the Law Office of Thomas Denny can help better your financial situation, call (716) 800-1234 to schedule a free consultation.