El Cajon Bankruptcy Attorneys

Our El Cajon law firm provides counsel for all bankruptcy types:

• Chapter 7
• Chapter 11
• Chapter 13

Read Bankruptcy Attorney Andrew H. Griffin, III, APC books titled:

• Chapter 13 Bankruptcy - A Brief Overview
• Chapter 7 Bankruptcy - A Brief Overview

How Bankruptcy Affects Your Credit

Filing for bankruptcy can have a significant impact on your credit score. It’s important to understand both the short-term and long-term effects:

• Immediate Impact on Your Credit Score: Bankruptcy will typically cause a sharp drop in your credit score. The exact decrease depends on your current credit situation, but it can be substantial.
• Bankruptcy on Your Credit Report: A bankruptcy filing will appear on your credit report for 7 to 10 years, depending on the chapter of bankruptcy you file. This can make it difficult to secure new loans or credit during that time.
• Future Borrowing: After bankruptcy, lenders may view you as a high-risk borrower, and it may be harder to get approval for mortgages, car loans, or credit cards. If approved, you may face higher interest rates.

Tips to Rebuild Credit After Bankruptcy:

• Monitor Your Credit: Regularly check your credit report to ensure accuracy and stay on top of your financial progress.
• Make Payments on Time: Timely payments on your remaining debts are crucial in rebuilding your credit.
• Get a Secured Credit Card: Secured credit cards can help rebuild credit if used responsibly.
• Keep Credit Utilization Low: Try to keep your credit card balance below 30% of your available credit.

Eligibility for Bankruptcy

To file for bankruptcy, you must meet specific eligibility criteria, which vary based on the chapter you are filing under:

Chapter 7:

• Income requirements: Your income must be below the state median or pass the "means test," which compares your income to the median income in your state.
• You must have limited disposable income after essential expenses.

Chapter 13:

• Income requirements: You need a regular income to repay a portion of your debt over 3 to 5 years.
• Debt limits: Your secured debts must be under $1.2 million, and unsecured debts must be under $400,000.

Chapter 11:

• Designed for businesses but also available to individuals with high debts.
• No specific debt limit, but the filing process is more complex and costly.

The Bankruptcy Process

Filing for bankruptcy involves several key steps:

1. Preparing Your Petition: You will need to gather all your financial documents, including income, debts, and assets, and fill out the bankruptcy forms.
2. Filing with the Court: Once your petition is complete, you file it with the bankruptcy court.
3. Automatic Stay: Once filed, creditors must stop contacting you, including halting garnishments, repossessions, and lawsuits.
4. Meeting of Creditors: After filing, you will attend a meeting with the bankruptcy trustee and your creditors, where you will answer questions about your finances.
5. Discharge of Debt: If the court approves your bankruptcy, your qualifying debts will be discharged, meaning you are no longer responsible for paying them.

Bankruptcy Alternatives

Before choosing bankruptcy, there are several alternatives you may want to consider:

• Debt Settlement: You negotiate with creditors to settle your debts for less than you owe. This option can reduce your total debt but may affect your credit score.
• Debt Consolidation: This involves combining multiple debts into one, typically through a loan with a lower interest rate. It simplifies payments but doesn’t eliminate debt.
• Credit Counseling: A credit counselor can help you create a repayment plan and work with creditors to reduce your monthly payments or interest rates.

These alternatives might be appropriate if your debt is manageable and you prefer to avoid the long-term consequences of bankruptcy. However, they may not provide the same level of protection from creditors or eliminate debt like bankruptcy can.