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Columbia Bankruptcy Law Blog

Tips on cutting costs after bankruptcy

For those considering bankruptcy, you may be worried about the decision plummeting an already-suffering credit score into a hole you can't dig yourself out of. But bankruptcy is meant to help you get back on your feet and credit scores are subject to change.

Here are a few tips to help you budget efficiently to improve your credit score after bankruptcy.

Understanding Chapter 7 bankruptcy in South Carolina

A great deal of misinformation is often circulated when discussing the topic of bankruptcy. For many South Carolina residents, the idea of filing for Chapter 7 bankruptcy can be equated with all manner of negative decisions, but the reality is for many people, bankruptcy is the most sound financial option. In cases of significant debt, bankruptcy can provide the relief that allows individuals and families to recover from loss and get back on the right track.

Generally speaking, bankruptcy is a legal process wherein a federal court reviews debts and liabilities, as well as tracks assets in an effort to gain a clear picture of the overall financial situation. Once this assessment is complete, the court determines what amount of the assets can be liquidated to pay down creditors. The court also takes into consideration debts that can be discharged -- these are often referred to as "unsecured debts" and include medical and credit card debt.

Will filing for bankruptcy destroy my credit?

Many people mistakenly believe that filing for bankruptcy will permanently ruin their credit. This is not true. While your credit will take a hit after you file for bankruptcy, you may be surprised that the long-term impact on your credit is not as bad as you might think.

Any negative item on your credit report will diminish over time, including bankruptcy. However, your credit score will significantly lower after filing, and the terms for any loan you request will be less than favorable. However, it can take as little as two years to begin to see credit offers that reflect more normal terms. What happens to your credit following a bankruptcy is seen by many as the lesser of two evils, better than defaulting on loans or receiving constant calls from creditors.

Chapter 7 filings increasing in over 65 age group

Many South Carolina residents are nearing age 65 or have already celebrated that age-of-retirement birthday. While many older people have a lot in common, such as being grandparents or having certain health issues, there appears to be another area where many elders are experiencing similar situations. It has to do with finances and Chapter 7 bankruptcy.

In a perfect world, the rest of this post would be about how South Carolinians retire at age 65 then head off to fulfill their golden year dreams, like traveling, spending time on their hobbies or investing in beachfront properties where they can live out their days seek whatever pleasantries suit them. Since this is not a perfect world, the reality is often much different. In fact, the financial issue that many seniors reportedly have in common these days is bankruptcy.

Making purchases in Chapter 7 bankruptcy in South Carolina

There is a considerable amount of misinformation commonly attributed to bankruptcy. When an individual in South Carolina files for Chapter 7 bankruptcy, it can be unclear what financial allowances they are afforded during the process. While it may be possible to make larger purchases like a new vehicle during the filing, it may not be in the best interest of the individual to do so.

Chapter 7 is considered a "liquidation" bankruptcy, in which assets are tallied and then used to pay down creditors. This process generally takes up to half a year, and individuals who file are required by law to report all assets to the bankruptcy trustee. Some assets may be considered exempt from this process, including vehicles that are currently being financed, depending on the laws of the individual's state of residence.

South Carolina consumers can take serious approach to money

Personal finance advisors warn consumers that taking a loose approach to their money issues can lead to serious trouble. It may not seem like a big deal to be charged a late fee occasionally or to overdraw one's checking account, but these may point to signs of dangerous habits that have led many others down the road of overwhelming debt, harassment from creditors and fears of losing their homes. Whether a South Carolina consumer is trying to avoid a financial crisis or recover from one, the first step is to examine the way one handles money.

Financial trouble often results from unregulated spending. Those who spend mindlessly are more likely to end up with debt they cannot pay. Avoiding this may include planning ahead for large purchases and using a list for daily or weekly spending. While credit cards are handy in some circumstances, those who use them for day-to-day expenses can quickly fall into the habit and wind up with high-interest debt they cannot pay.

Medical debt, lower incomes pushing seniors into bankruptcy

The idea of a peaceful retirement in which people stop working and live out their remaining years peacefully is no longer a reality for many. Dwindling incomes and soaring health care costs are creating a financial storm for Americans over the age of 65. Now, bankruptcy because of medical debt is sadly not that uncommon for this group. 

A couple decades ago, retirees in South Carolina could expect to live comfortably on pensions, Social Security and maybe a bit of savings. As pensions have largely fallen out of favor and businesses heap the burden of saving for retirement onto workers, fewer people are financially prepared for this period of life. The biggest financial strain according to one expert? Just the costs associated with getting older. 

Should you reconsider taking a payday loan?

When you face financial hardship, it is natural to try to fix the issue as soon as possible. No one wants to suffer from financial stress and continuous worry.

You may be considering taking out a payday loan as a quick cure for this financial ailment. A payday loan is a way to secure short-term financing that does not require any sort of credit check. But is a payday loan really a good idea?

More South Carolina seniors seek Chapter 7 bankruptcy

More and more Americans over the age of 65 are facing financial strife that is leading them into late-life debt, according to studies. The paper, "Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society" contends that increased costs for health care, as well as the reduced income that comes with retirement, are weighing heavily on the over-65 demographic here in South Carolina and elsewhere. As a result, older people are becoming increasingly likely to choose Chapter 7 bankruptcy as a viable way to eliminate this debt in their golden years. 

In the last several years, older Americans have filed for bankruptcy protection at twice the average rate, and the number of older people entering the bankruptcy system has quintupled. Further studies indicate that the average over-65 bankruptcy filer is carrying debt worth roughly $17,390. What is more, the same studies suggest that if policy changes meant to support seniors and provide a social safety net are not implemented, these numbers will only continue to rise. 

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