Rebuilding Your Credit after Filing for Bankruptcy

How to Recover Your Finances after Filing for Bankruptcy

When you file for bankruptcy, it will be listed on your credit score for up to ten years. Your credit score will remain low until you start to rebuild your credit.
Rebuilding your credit score after filing takes time and diligence. Taking out credit is the best and easiest way to do so. After filing for bankruptcy, it may seem impossible to get a line of credit ever again. There are easy and safe ways to apply for credit but we must stress that payments should always made every month and on-time.

Pay Off Existing Debt

The most important thing to do before you begin your rebuild your credit is paying off existing bills. Set-up automatic bill payments and pay your rent on time as rent payments are also tracked by creditors.

Setting up a realistic budget for yourself is the best step you can take to ensure you do not fall victim to debt once again.

Secure Card          

A secured card is the best option for those who are not approved for an unsecured card. The difference between the two is that a secured card requires a cash deposit beforehand. The cash will serve as a credit line for the account. Your payment history will be given to credit reporting agencies by the credit card issuers. Over time, your credit will improve if you make payments on time and keep your balances low.

Retail Card

Department stores that offer credit cards tend to have more lacked credit requirements. Even with bankruptcy, you may still qualify for a credit card. They also have a higher interest rate, so be sure to make your payment every month.

Debt Consolidation in Sacramento

Many let their shame of filing for bankruptcy as a reason to not move forward. It is vital to let that go in order to not only rebuild your credit and your lives. For assistance with your bankruptcy needs, look to Liviakis Law Firm. We will help you navigate your bankruptcy and aid you in rebuilding your debt. For a free consultation, contact our office at (916)459-2364.

Remember to come back to our blog page for more information about how to navigate your bankruptcy.

Debt Relief

Commons Reasons to Ask for Debt Relief

There are many reasons that folks in the Sacramento area file for bankruptcy protection. From divorce to medical expenses, tough (but common) life events are often the primary cause of bankruptcy. It is important to realize that these problems happen to many, many people. While feelings of shame are valid and come from a place of personal responsibility, it is crucial that proactive steps be taken and experience counsel sought in order to survive tragic life events intact.

Lack of Employment – Thousands of consumers in the Sacramento area are unemployed, which also likely means that they are having trouble making payments to credit cards or maintaining insurance. This can lead to debt collection problems and medical debt.

Medical Expenses – Studies have recently shown that 42 percent of all personal bankruptcies result from medical expenses. And just because a consumer has health insurance doesn’t mean they are immune from devastating medical debt. In fact, 78 percent of those that filed due to medical debt actually had health insurance.

Family Support Obligations – Child support, alimony, and the burden of providing for a household on a single income can result in substantial financial stress. These factors combined with a high divorce rate show that 8 percent of personal bankruptcies are caused by family support obligations. In addition, these situations may also lead to decreased earning power because of the emotional distress.

Disasters – Even those with the foresight to save an emergency fund often find themselves not fully prepared for natural disasters like floods, hurricanes, and earthquakes. Even with insurance, these events can lead to bankruptcy because can lead to loss of a consumer’s home, or even her job.

Student Loans – Student loans are fast becoming more and more burdensome as the cost of education grows and the availability of jobs continues to be stagnant. While student loans won’t be eliminated in bankruptcy like other unsecured debts, it is sometimes possible to use the bankruptcy in a greater plan to free up other money to satisfy student loans.

Uncontrolled Spending Habits – Out-of-control credit card bills, car payments, and mortgages often force consumers into bankruptcy. If a consumer is unable to make even the minimum payments, bankruptcy may be the only way out. Prior to the housing crisis, it was easier to borrow more money to deal with spending problems. But now there is less money to borrow. Even when there is credit to be had, it is likely only a temporary solution. Even those that use “solutions” like debt consolidation and home equity loans often find themselves filing bankruptcy.

The fact of the matter is that there is a common thread throughout these most common causes of bankruptcy: they all require extraordinary steps to stop the bleeding. Which is exactly what Congress intended bankruptcy to provide: a legal apparatus with extraordinary power to provide a fresh start to consumers. Bankruptcy can truly be the difference between failure and success for many folks, but the complexity of bankruptcy is certainly surmountable with the proper counsel.

Chapter 7

Attending Bankruptcy Court for the Trustee and Meeting of Creditors

What is the Meeting of Creditors and Why do I have to go?

One of the most central moments during a bankruptcy is the initial meeting of creditors. There are a number of procedures and requirements with which the debtor and her attorney must comply. Failure to do so will likely lead to dismissal of the case. This means that the debtor isn’t going to get their debt discharged.

There are many purposes for the meeting of creditors, but the primary focus is to obtain further information about the debtor’s case, particularly data regarding the debtor’s assets and liabilities. In a Chapter 7 bankruptcy, the trustee is interested in, among other things, determining the value of assets and whether or not they are exempt. In a Chapter 13 bankruptcy, the trustee is interested in, among other things, determining if the payment plan is feasible and that the creditors are being paid as much as possible.

Document Requirements

Depending on local practice or bankruptcy rules, the documents required may vary. In Sacramento, there are many different trustees. Whether they are Chapter 7 or Chapter 13 trustees, they require the documents identified in the bankruptcy code. In addition, they often request additional documents. The case will be over much more quickly than the debtor would like if the trustee doesn’t get the documents she requests.

In the Eastern District of California, debtors are required to produce photo identification and proof of social security at the meeting of creditors. It is important to work closely with your attorney to make sure the proper documents are provided.

What does the trustee ask?

The trustee asks many questions, which often vary depending on the facts of the case. It is important to listen closely to the trustee’s questions and answer thoughtfully and truthfully, as the debtor will be under oath and answering under penalty of perjury. Answering honestly will also make the whole process goes more smoothly. The trustee often asks if the debtor is expecting an inheritance or if they’ve won the lottery. The trustee will ask whether the debtor read and understood all the documents that they signed and filed with the bankruptcy. In a Chapter 7 in Sacramento, there is a “Bankruptcy Information Sheet” that the debtor should read before the meeting. The trustee will ask if the debtor has done so.

There are many more questions that could come up. The best way to be prepared is to talk to an attorney about the facts of the case before the meeting. A good attorney will help prepare the debtor for all aspects of the meeting of creditors.

Do creditors really show up?

Yes. But not always. Depending on the situation, creditors will be more or less likely to appear. If a creditor believes the debtor is hiding assets or not being truthful in the bankruptcy documents, the creditor may show up and ask questions to get more information. If there is a highly contested issue in the bankruptcy, creditors are more likely to appear and ask questions of the debtor. Typically, however, in consumer bankruptcy cases, it is fairly rare for creditors to make an appearance at the meeting of creditors.

That doesn’t sound so bad.

No, it doesn’t. But it is key for the debtor to be responsive to communications from her attorney so that they can work together to satisfy all the requirements and keep the trustee satisfied. Preparation and cooperation will make the meeting go smoothly and get the debtor one big step closer to discharge.


The Automatic Stay in Bankruptcy Blocks Creditors

For many folks in the greater Sacramento area, the most valuable component of a bankruptcy is the automatic stay, which is usually gained immediately upon the filing of the initial bankruptcy documents. The stay stops most creditor actions against a debtor, including foreclosures, repossessions, garnishments, utility shut-offs, and, most of the time, evictions. The stay can also be effective in ending creditor collection efforts and can result in contempt or money damages and attorneys fees. Finally, the stay can simply provide some breathing room for a debtor to catch her breath and give her some time to figure out how to solve financial problems.

The Stay May Also Protect Friends And Relatives

Chapter 13 bankruptcies have a special additional stay called the “codebtor stay.” This special provision provides protection for those that are codebtors with the filing debtor. This may be an important reason to file because it can provide some relief for friends or relatives of the person filing bankruptcy.

The Duration of the Stay

The duration of the stay depends on the circumstances of the case. Unless the court lifts the stay, the stay lasts for the duration of the case, usually three to six months in a no asset Chapter 7 case and up to five years in a Chapter 13 case.

However, if a bankruptcy case was dismissed within a year of a filing a new petition, the stay terminates thirty days after filing. The shortened stay can be extended by the court if the debtor can show the case was filed in good faith. If a debtor has two or more cases dismissed within the year prior to filing a petition, the stay is no longer automatic and court approval is required to impose the protections of the stay. The law puts these rules in place to make sure people aren’t abusing the system.

The Stay Even Applies to the IRS

Even the IRS is not allowed to take collection certain actions after the petition has been filed. It may still be able to continue an audit, but it must put a stop to an existing collection action and must not begin a new collection action without court approval.

Consequences if Creditors Violate the Stay

Some creditors violate the stay accidentally. If that is the case, they must stop collection actions immediately upon learning of the bankruptcy. However, a great many violations are done on purpose. If such a violation is “willful”, the creditor might be in for some substantial penalties. Not only can a bankruptcy filer recover money or property taken wrongfully, but may also be entitled to attorney fees and punitive damages.

The Stay Only Works if You Use It

Like an umbrella, the stay only protects you if you use it right. Don’t open the umbrella when it rains, and you’re all wet. If creditors violate the stay and you don’t inform your attorney, there may be little to no actual consequences. The automatic stay can be a powerful provision, but often only when you use it. Remember the power of the automatic stay!

Debt Relief

Debt Consolidation vs. Bankruptcy

Most people face financial difficulty at certain times in their lives. But for some people, the amount of stress caused by substantial debts can be completely overwhelming. If you have reached the point in your finances that you are in way over your head and can’t find a way out, you may want to consider bankruptcy or debt consolidation.

While the term bankruptcy has often had negative connotations, it can actually be a great way to get relief and a fresh start financially. If you think bankruptcy or debt consolidation is right for you, there are a few things to consider.

There Are Differences

First, you must understand the difference between bankruptcy and debt consolidation. When you consolidate your debts, you reorganize all of your various debt payments into one payment. You can either choose to consolidate debt through a secured loan or use an unsecured loan. Most of these debt reorganization loans are on a 3 to 5 year plan. Many people under extreme stress from debts find it incredibly beneficial to have just one payment rather than trying to balance several credit cards and other debts.

With debt consolidation, you can protect your reputation and credit score. You may also be able to keep your access to your credit cards. While most people wanting to consolidate debt are trying to avoid more debt, there are always exceptions. No one can prepare for life’s unexpected emergencies. Credit cards allow you to have an option for payment if an emergency should arise.

Bankruptcy Offers Protection

Unlike a debt consolidation plan, bankruptcy can actually eliminate certain types of debt, such as medical bills and credit cards. This type of bankruptcy is a Chapter 7. A Chapter 13 bankruptcy case is one where you rearrange your debts through a controlled repayment plan. Both Chapter 7 and Chapter 13 cases are the most common types that an individual or small business can file for.

When you file for bankruptcy, you will have protection from creditors. This is called the automatic stay. The automatic stay prohibits most creditors and collectors from any type of collection activity against you. It also has the power to stop distressing phone calls, lawsuits, repossessions, and foreclosures.

Bankruptcy and debt consolidation plans are your chance for the weight of your debts to be lifted from your shoulders. If you feel ready for a drastic change in your financial situation, we at Liviakis Law Firm can help you find out which type of debt relief you qualify for and help you get started.




Bankruptcy: Before or After Foreclosure?

At times, we all face hard decisions and, most often, they get harder as we grow up. For many Americans, the economy has been a challenge, leaving many of us to make hard financial decisions. Luckily, there are people who can make such decisions easier. For anyone facing debt and foreclosure, take heart, we promise it isn't as bad as it seems.

It's Financially Responsible

Bankruptcy has gotten a bad rap over the years, but the truth is, it may very well be the best and most financially responsible thing a person can do. The reason for needing a reprieve from financial stress doesn't matter; what matters is what happens going forward. When facing debt and foreclosure at the same time, there is a proper way to do things and certain steps which should be taken first.

Bankruptcy Should Always Come First

When deciding whether to file for bankruptcy before or after a foreclosure, always choose before. If nothing else, filing for bankruptcy before a foreclosure can help retain control over the home for a longer period of time, thus reducing the stress and anxiety of being displaced. In most cases, a few more months can help someone find a new home or make accommodations with friends or relatives.

Bankruptcy Prevents Future Debt

Besides prolonging the amount of time someone can live in a home, declaring bankruptcy before a home goes into foreclosure may prevent a mortgage lender from being granted deficiency judgment. In real estate and bankruptcy law, deficiencies are simply the difference between what a home sells for at a foreclosure sale and what the homeowners still owe their lender. Say for example, Angela owes her mortgage lender $300,000 but her home only sells for $200,000 at a foreclosure sale. This means there is a deficiency of $100,000. In most states, the lender can then sue Angela for the amount of that deficiency. By filing bankruptcy before her home goes into foreclosure, Angela can prevent her lender from coming after her for that $100,000.

Bankruptcy Blocks the IRS

As if fighting with a mortgage lender isn't enough of a headache, foreclosure can get even more complicated thanks to good ol' Uncle Sam. Let's say someone is lucky enough to have their mortgage lender decide not to go after the mortgage deficiency. Seems great right? Oh wait, Uncle Sam has decided that the amount of the forgiven deficiency is income, and therefore taxable. So, if Angela's bank were to forgive her the $100,000, Uncle Sam treats Angela as if she made $100,000 and requires her to pay taxes on it. (Clearly the government is not paying attention to the situation, but what else is new?).

When someone files for bankruptcy, the government is not allowed to charge taxes on forgiven deficiencies per the Mortgage Debt Relief Act of 2007. This Act states that the government cannot require taxes on debt that was forgiven while the indebted party was unable to pay. Another word used for "unable to pay" is "insolvent," which the government defines as someone whose debts are greater than their assets. In almost all cases, the insolvency clause does not apply if bankruptcy is filed after the debt (in this case mortgage) is forgiven.

Bankruptcy Applies to Other Debt

In many cases, people take out second mortgages or incur other types of mortgage debt which are also affected by foreclosure and bankruptcy. In cases where a secondary mortgage lender loses money on a property, that lender can sue for its losses. It is only through bankruptcy that someone can prevent such lenders from filing suit.

Business & Commercial Bankruptcy

The Benefits of Bankruptcy Can Help to Alleviate Pre-Bankruptcy Concerns

Filing for bankruptcy due to credit card or other debt may seem intimidating, but the fact of the matter is it might be the smartest financial decision you will ever make. Bankruptcy gives people the opportunity to have a fresh start on their finances and there are many benefits to filing that you should be aware of if you are considering this as a next option. Here are just a few of the many reasons why filing for bankruptcy is a great thing.

  1. Gives You a Fresh Start
    The first goal of bankruptcy is to offer people a fresh start. If this is something you have been considering, know ahead of time that bankruptcy can reduce stress due to finances as well as erase any debts that you might have had that were weighing you down.


  1. Gets Collectors off Your Back
    Filing for bankruptcy will make it illegal for people to harass you about your debt. They will not be allowed to call you, send letters to your home or place of business, or garnish your wages. When you file for bankruptcy, you will experience a renewed freedom that you might not have had for a while.


  1. Keep Your House and Cars
    When you file for bankruptcy, rest assured that as long as you are current on your mortgage and auto loan payments, if you want to keep those things, you certainly can. Many people worry that their homes and cars will be taken away to pay off debts but as long as you are making payments, you will be fine.


  1. Put the Past behind You
    A bankruptcy filing is in a lot of cases the perfect solution to major financial problems in a person’s life. While many people feel that bankruptcy ruins a person’s credit, we can assure you that what it really does is allows the person to be reborn with new credit and an opportunity to make better financial decisions in the future.



Business & Commercial Bankruptcy

3 Reasons to Consider Bankruptcy Right Away

Below represents 3 common reasons you may benefit from filing for bankruptcy sooner rather than later:

1.     Stop Foreclosure on Your Home

Filing for bankruptcy will stop the foreclosure process the moment your bankruptcy documents are filed. You will be notified by your bank if they plan on foreclosing on your home. A deadline will be given you to either bring your mortgage current or they will foreclose on a specific date.

2.     Stop Your Car from Being Repossessed

If your lender is in the process of repossessing your car, a bankruptcy can help you to stop the repossession and even get your car back after repossession. Chapter 7 and Chapter 13 bankruptcy will both allow you to catch up on your loan payments.

3.     Stop a Lawsuit

Bankruptcy will delay or stop a credit card lawsuit. An automatic stay goes into effect that prohibits most creditors from trying to collect debts from you. The effect of the bankruptcy on the lawsuit and debt depends on the claim and type of bankruptcy. If you are being sued by your creditors, filing for bankruptcy relief may help.




Debt Relief

Eliminating or Restructuring Credit Card Debt through Bankruptcy

If you are facing serious credit card debt problems, filing for bankruptcy may offer a powerful solution. Carrying a balance on a credit card is usually not a problem; it is when you have too much credit card debt and you can only afford to make the minimum payments that the difficulties start. Credit cards have interest rates that change periodically, fees seem to be hidden sometimes, and the contracts can be difficult to understand. When you add complicated billing procedures to the mix, the financial results can be devastating. Getting a credit card is easy. Getting rid of credit card debt can be very difficult. Fortunately though, filing for bankruptcy can eliminate or restructure your credit card debt.

Chapter 7

When credit card debt is your only type of debt, Chapter 7 bankruptcy can eliminate all the credit card debt you have. Chapter 7 was designed to include unsecured debt. Examples of unsecured debt are utility bills, medical bills, and credit cards. Filing for Chapter 7 bankruptcy will stop creditors from harassing you with any more phone calls and letters in the mail. Your property will be protected and your debt can be discharged. You should come out of the process debt free and much stronger financially. Once you have filed for Chapter 7 bankruptcy, you are automatically protected from garnished wages, law suits, and further actions by the credit card companies.

Chapter 13

Chapter 13 can include credit card debt as well as all other kinds of debt. This type of bankruptcy will allow you to get current on your mortgage payments and can be instrumental in getting the high interest rates reduced. Chapter 13 bankruptcy will allow for your debt to be prioritized and reorganized. This will allow your creditors to eventually get paid in a much more comfortable way for you financially. Proposing a repayment plan will allow you to repay your debt within a 3- to 5-year period.

An initial consultation with a bankruptcy attorney can get you started towards the financial freedom you are desperately seeking. Our law firm offers free initial consultations and because of our experience and knowledge, we know how to get the best possible outcome when it comes to filing for bankruptcy.


Credit Card Debt

Credit Credit Reward Allows Customers to Pay Off Other Debt

When the economy takes a turn downward, many people have to make changes to both what they purchase and how they purchase it. Many Americans have begun to make a budget in order to better manage finances. But for necessary expenses, some turn more heavily to credit cards.

Credit cards can be a tool to finance everyday purchases until the economy turns around. But relying on credit cards can lead to credit card debt. In many cases, increasing credit card debt can be taken care of by the consumer by cutting back spending and paying it off. For some, the balance can get out of control and the consumer has few options to pay off the balance. One option for those facing substantial credit card debt is bankruptcy.

Wells Fargo is trying to grow a small credit card market. In 2007, Wells Fargo released a new type of credit card. This credit card is known as the Home Rebate Card. It automatically puts a one percent rebate towards a Wells Fargo home loan.

Wells Fargo is now considering a similar card for those with student loans and car loans.

Less than one third of Wells Fargo customers have a Wells Fargo credit card. It is only eighth among all US credit card issuers. Wells Fargo is not the first credit card company to offer its customers ways to pay down their balance with rewards. American Express and Discover have allowed their customer to pay down balances with reward points for a long time.

The bank reports that customer of their Home Rebate Card have paid down over $50 million of their mortgage balances since the cards launch.

Source:, "Wells Fargo to offer credit cards that help cut consumer debt," Aug. 5, 2013, Peter Rudegeair