Legal Question in Bankruptcy in New Jersey

Re: How does Bankruptcy affect future credit

Presently, most credit card debt is unsecured and will be discharged (relieved) by filing for bankruptcy under Ch 7. There are pending changes to the bankruptcy code which would force more people to pay back part of their debts. Chances are your daughters credit has already been affected by these debts. A bankruptcy will be reported on your credit report for 10 years. Some lenders may be more willing to lend to your daugther after the other debts have been discharged. Due to the pending changes in the Bankruptcy Code, your daugther should consult an attorney immediately if she is considering filing. Anthoer possible alternative is to negotiate with the lenders on some sort of payback schedule. Some lenders will settle for less in order to be assured of being paid something.

Re: How does Bankruptcy affect future credit

Subject to an interview and review of your daughter's debts by bankruptcy counsel, it would appear that to the extent the debt in question is comprised of credit card liabilities, it is generally dischargeable under current law in a Chapter 7 bankruptcy proceeding. While a Chapter 7 filing may remain on her credit record for 10 years, it appears that your daughter's credit rating now is not very good anyway, so any negative the effect might not be significant; perhaps it might actually serve to improve her credit rating in the long term since potential creditors will know that she has successfully discharged a significant amount of debt that will no longer interfere with her ability to honor post bankruptcy obligations. In terms of future credit, once she discharges her debt in a Chapter 7, she can rehabilitate her credit like so many others have before her, i.e., with secured credit cards, etc. The law is likely to change with the new bill pending in Congress and make Chapter 7 filings and discharges more onerous, so now is a good time for your daughter to explore her bankruptcy options, particularly insofar as she is young and seems to have little in the way of assets which might be vulnerable in a bankruptcy proceeding.

Re: How does Bankruptcy affect future credit

hi - sometimes a person is considered a better credit risk after a bankruptcy - they've "learned their lesson", so to speak. usually, the credit cards are unsecured debts, so they are wiped out completely. remember, the laws may be changing soon, and many people are filing now to avoid possible problems. if you have any further questions, feel free to call me at 609 263-0089. good luck !!