Dayton Bankruptcy Law Blog

If you are like most in Dayton who struggle with debt, the prospect of having to seek bankruptcy protection may not be attractive, yet also may appear to be your only option if you hope to get a handle on your financial situation again. Your concerns might come from an assumption that the government is more than willing to offer you bankruptcy protection as a way out, when in reality, the bankruptcy code is designed to offer you several options to deal with your debt. 

Why else, then, would it be a requirement that you go through credit counseling prior to filing for bankruptcy? Per Section 521(b) of the Federal Bankruptcy Code, you must submit a certificate showing that you have completed credit counseling along with the other required paperwork when first filing for bankruptcy. A credit counseling agency can develop a repayment plan that shows how you might be able to repay your creditors without filing for bankruptcy. In some cases (depending on the assets you have available to you), this may only serve to reaffirm the need for you to file for bankruptcy. However, it may also reveal that repayment is indeed a reasonable option. 

Filing for bankruptcy is one method many people across Ohio use to help themselves regain their financial footing, but there are certain behaviors and lifestyle changes you will need to make after doing so. In addition to watching your spending and making sure to stay on top of all your bills, you will also need to consider how filing for bankruptcy will affect you, come tax time. At Kennel Zeigler LLC, we have a firm understanding of how filing for bankruptcy can impact your taxes, and we have helped many clients navigate their way through this and similar matters.

According to TurboTax, one of the first things you may want to think about doing if you believe a bankruptcy filing is in your future is file your taxes before moving forward with your bankruptcy case. If it is too late to do so, it is imperative that you maintain a copy of all your tax records, and you should also be able to clearly explain and outline how you used any money you got as a tax refund when questioned.

Bankruptcy has a significant effect on one’s credit score, as well as their ability to apply for credit cards, home loans and other important financial support. Once a creditor spots a bankruptcy on an applicant’s record, they may be alerted to the fact that he or she has trouble meeting their financial obligations. There are ways that debtors can rebuild their credit following a bankruptcy, including applying for subprime credit cards. These types of credit cards are designed for people who struggle with bankruptcy, as they will approve those who have a bankruptcy on their record. Experts warn people who apply for these credit cards that high interest rates and fees could lead to more financial trouble.

Subprime credit card lenders approve people with poor credit, below 600, and attempt to help them rebuild their credit score by giving them a chance to charge and repay their balance. As a way to minimize their risk, however, subprime specialist issuers must charge high interest rates, processing fees, annual fees, maintenance fees and authorized user fees. This can put the applicant in danger of becoming indebted once again. CBS News reported that paying off a subprime credit card takes on average, 70 percent longer than paying off a traditional credit card because of all of these added fees and charges. In addition, the agreements can be difficult to read and understand.

Your credit card can be a helpful tool if you use it correctly and responsibly. Unfortunately, it is easy to rack up credit card debt. 

The causes of credit card debt vary widely and are often unique to each person. However, there are some noteworthy trends. Here are some situations, habits and factors that contribute to financial ruin.