I met with a very nice couple last night. They have a house worth about $100,000 with a mortgage of about $65,000, a car with payments of about $400 per month and an older one that is paid off. They bring in about $35,000 per year between them and they have $28,000 in credit card debt.
They have been making the credit card payments, but have been unable to fix their roof, the tires are bald on one of the cars, and they have fallen behind on the utility bills. Their credit score is sparkling. How is that possible?
A Perfect Score
I did the numbers. With the amount of money coming into the household, they can barely make their non-credit card expenses, let alone have enough to pay on the cards. Filing a bankruptcy will allow them to keep their house and cars, as long as they continue to make their payments, and keep everything else they have, including her pension.
However, they are worried, as they don’t want their credit to turn bad. Their solution is to let the roof leak, let the car skid into a guard rail or another car and let them shut off the heat, all just to save the credit score.
Credit Will Come Back
While it is nice to have good credit, it is infinitely better for them to be able to afford to pay their expenses from their own money if possible. Plus, their good credit will actually come back much more quickly than they realize.
How quickly will their credit return? For some purposes and in most cases, immediately. Our clients at Steidl and Steinberg are shocked when they start getting offers to finance cars right after they file for bankruptcy. For traditional credit, in most cases you can expect to have about one third of your credit back within a year of the end of your bankruptcy, two thirds after two years, and all of credit back within three years. That is credit that will allow you to buy a house at market rates. Is this guaranteed? No, but it is what we have seen over the years in most cases.
So let the experienced bankruptcy attorneys of Steidl & Steinberg assess your finances to see if a bankruptcy might be a good solution for your financial problems. Then, you can get that roof fixed and some new tires for your car.