Dayton Bankruptcy Law Blog

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.

At Kennel Zeigler, LLC, in Ohio, we understand that overwhelming credit card debt can get you in a lot of trouble. The card balances increase faster than you can pay them down, and the monthly interest charges eat you alive. You may have heard that you can get your credit card debt discharged in a Chapter 7 bankruptcy, and this is true enough. However, if you have begun thinking about bankruptcy as your only way out, you would do well to stop using your credit cards now. Why? Because the Bankruptcy Court may not discharge your recent credit card debt.

As reported by Bloomberg News, the Bankruptcy Code Section 523(a)(2)(C)(I) includes a presumption against the discharge of the debts you incur from a creditor within 90 days of the date on which you file bankruptcy if those debts represent your purchase of consumer goods amounting to $675 or more.

If you are an Ohio resident who is finding it hard to stay on top of your finances, know that you are not alone. Many people across the state and nation are struggling under the pressure of mounting medical and other debt, and if you count yourself among them, you may be wondering whether filing for bankruptcy can help you find the relief you seek. At Kennel Zeigler LLC, we have a comprehensive understanding of the bankruptcy process, and we have helped many clients better understand it and make educated decisions about whether they may want to proceed.

Bankruptcy is complicated and commonly misunderstood, and Nerdwallet reports that there is also a lot of misinformation circulating out there about the process and what it all means. Recognizing common misconceptions about bankruptcy may help you cut through the noise and make an informed decision about whether filing might be the right step for you. So, what are some of today’s commonly heard bankruptcy myths?