Bouloukos, Oglesby and Mitchell, law firm in Birmingham, Alabama.



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What does bankruptcy do to a person’s credit rating and reputation?


Many people believe that filing bankruptcy is the death nail to a person’s credit rating as well as their reputation. Chances are it won’t have any effect on either.


Typically, when people come to my office to discuss the possibility of filing bankruptcy their credit rating has already taken a big hit well before they meet with me. In fact, the vast majority of people that are contemplating filing either a chapter 7 or 13 have been struggling to pay their creditors for a long time. When a person defaults on payments or is even late with a payment, creditors make negative reports to the credit bureaus. These negative reports will lower an otherwise good credit rating very quickly.


People are often concerned about the stigma that bankruptcy carries with it.  Even though a bankruptcy filing becomes public record, the average person will never know when someone files bankruptcy.  Consumer bankruptcies are not published in newspapers or other forms of news media. Also, given the state of the nation’s economy over the last five years, bankruptcy filings have been at an all time high. Consequently, with the number of people struggling to make ends meet, someone filing for bankruptcy protection just doesn’t carry the stigma that it might have years ago.


If you’re contemplating filing bankruptcy but faced with the dilemma of what effect it might have on your credit rating and reputation, please call the law firm of Bouloukos, Oglesby and Mitchell, and let’s go over these and any other questions or concerns you may have.


Myths About Filing for Bankruptcy


1- Filing Bankruptcy Will Ruin My Credit Forever


Not True. A Bankruptcy filing will appear on your credit report; however, more than likely, your credit was already seriously impaired before you ever filed bankruptcy. In fact, filing bankruptcy will likely improve your credit over time.


2- If You Are Married, Both Spouse Must File Bankruptcy


False. Although there might be valid reasons for both spouses to file a joint bankruptcy, there is nothing under the law requiring them to do so.


3- Will Never Be Able To Obtain Credit Again


Not True. There are many lenders that will extend credit to people that have recently filed bankruptcy. Filing bankruptcy erases debt and creditors know that by having the old debt erased, you are now capable of paying the new loan.


4- Back Taxes Are Non-Dischargeable In Bankruptcy


False. Certain income taxes can be included and discharged in bankruptcy. An experienced bankruptcy attorney can help determine if your tax debt is dischargeable.


5- If I File Bankruptcy, Everyone Will Know


Not True. Unless you tell people, more than likely no one will ever know. Filing bankruptcy is a public record but someone must have access to the bankruptcy filing system in order to see your case.


To learn more about the bankruptcy process, please contact attorney Josh J. Mitchell with the law firm of Bouloukos, Oglesby and Mitchell.




How does a Chapter 13 bankruptcy differ from a private debt consolidation service?


In a chapter 13 case, the bankruptcy court can provide relief to the debtor that a private debt consolidation service cannot provide. For example, the court has the authority to prohibit creditors from attaching, foreclosing or garnishing the debtor’s property. Also, the court can force certain unsecured creditors, like credit card companies, to accept a chapter 13 plan that only pays a portion of the debt. The remaining unpaid portion of the debt can be wiped out altogether by the bankruptcy discharge. The court can also require certain secured creditors to accept lower interest rates. A good example of this is on a car loan. A creditor may have a contract that calls for a 25% rate of interest. A chapter 13 plan can offer a substantially lower rate and, if approved by the court, the creditor must accept the lower rate. In a private debt consolidation, a debtor is still left at the mercy of his or her creditors. Not so in a chapter 13 case. For more information on why a chapter 13 might be a better alternative than private debt consolidation, call the law firm of Bouloukos, Oglesby and Mitchell.







Credit Card Debt and Bankruptcy One of the leading causes for people filing bankruptcy is credit card debt. This is due in large part to the ridiculous interest rates and late fees that many banks charge. Often these charges are well in excess of 30 percent. If you have a credit card balance of $7,000 and are just making the minimum monthly payment, depending on your age, it might take your entire life before you pay if off! By filing Chapter 7 bankruptcy you can totally eliminate all of your credit card debt along with all of the interest and late fees. Chapter 7 will also stop lawsuits and wage garnishments from unpaid credit card debt. There might be reasons for not filing Chapter 7. If Chapter 7 is not an option, then Chapter 13 is a viable alternative. Chapter 13 (also known as Debtors Court), allows for a reasonable repayment plan that lasts between 36 and 60 months.  One of the unique things about Chapter 13 is that all credit card interest stops from accruing the moment the case is filed. So, if you are paying a high rate of interest, Chapter 13 could save thousands of dollars just in interest alone. It might also be possible to pay back a small percentage of the total amount that is owed. For example, let’s assume you have $20,000 in credit card debt. Depending on your income and living expenses, you might be able to pay back only $500 and satisfy the debt in full. Instead of dealing with soaring credit debt for the rest of your life, you might be able to completely eliminate it with Chapter 7, or pay back pennies on the dollar and be completely debt free in just 36 to 60 months by filing Chapter 13. To find out more, please call the law firm of Bouloukos, Oglesby and Mitchell.       







Primary Reasons People File Bankruptcy


Loss of Job


The loss of income from a job is disastrous. Not having an emergency fund leaves people at the mercy of their creditors, and using credit cards to pay bills makes matters worse.  People that are unable to find work paying the same or close to the same amount may not be able to recover from the lack of income.


Injury or Illness


With the high cost of medical treatment, illness or injuries can result in thousands of dollars in medical bills. These bills can mount up quickly and wipe out savings and retirement accounts, college education funds and home equity. Bankruptcy may be the only alternative, regardless of whether the patient or his or her family was able to apply health coverage to a portion of the bill or not.




Divorce causes tremendous financial strain on everyone involved. The legal fees, which can be astronomical in some cases, followed by a division of marital assets, child support and/or alimony, and the ongoing cost of keeping up two separate households after the divorce can be insurmountable. The legal costs alone are enough to force some into bankruptcy, while wage garnishments for child support or alimony can prevent people from being able to pay other obligations.


Excessive Debt


Some people cannot control their spending. High interest credit card, installment debt, car and other loan payments can eventually spiral out of control, until finally the borrower is unable to make even the minimum payment on each type of debt. If the borrower cannot access funds from friends or family or otherwise, then bankruptcy is usually the inevitable alternative.


Unexpected Expenses


Loss of property due to theft or casualty, such as fires or tornadoes for which the owner is not insured can force some into bankruptcy. Many homeowners are likely unaware that they must take out separate coverage for certain events such as floods. Those who do not have coverage for this type of casualty can face the loss of not only their homes but most or all of their possessions as well. Not only must they then pay to replace these items, but they must also find immediate food and shelter in the meantime.


In many of the above situations, bankruptcy is a viable solution. Straight Chapter 7 bankruptcy can eliminate these types of debts in most situations. Chapter 13 might be a better alternative, particularly if a person has certain secured debts such as a car loan and wants to maintain possession of the car while lowering the payment. Contact the law firm of Bouloukos, Oglesby and Mitchell to discuss the available options.



No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. We are a debt relief agency. We help people file for relief under the Bankruptcy Code.