HAWAII BANKRUPTCY INFORMATION
WHAT IS BANKRUPTCY?
Bankruptcy is a legal proceeding where people who are unable to pay their debts can “discharge,” or get rid of their debts, and get a new financial start. These proceedings are handled by the United States Bankruptcy Courts, including the U.S. Bankruptcy Court for the District of Hawaii, located in Honolulu.
WHAT TYPES OF BANKRUPTCY ARE THERE?
Where individual people are concerned, there are two types of bankruptcy, “Chapter 7,” and “Chapter 13.” Here, “chapter” refers to the section of the United States Code that provides for bankruptcy filing. The two types are discussed in more detail in the links below.
WILL I BE ABLE TO CREDIT AGAIN? HOW LONG WILL IT TAKE?
This is one of the most common questions The answer is yes. Bankruptcy is not the death of credit, but the start of credit. As an example, we recently filed a Chapter 7 case in May 2010. The clients received a discharge and their case was closed in August 2010. Very shortly thereafter, the clients received a letter from Capital One stating: “records as of August 10, 2010, show you’ve successfully put bankruptcy behind you. And we’d like to welcome you back to a card offer that can help you rebuild your good credit.” While we cannot guarantee what kind of credit you will receive, this is just an example of what might be possible.
You may ask why would a bank give you credit if you just filed for bankruptcy. Well, they do so for a number of reasons. One is that if you filed a Chapter 7 case, you cannot file another Chapter 7 for another eight years. So possible lenders know that if you get credit, but do not pay, you will not be able to file another Chapter 7 for some time, and they can garnish you wages without having to worry about you filing a Chapter 7. Another reason may be that although you have a bankruptcy on your record and “bad credit” after bankruptcy, you may have ZERO debt. Since you have ZERO debt, you may actually be a better credit risk than someone who has perfect credit but a lot of debt.
From a common sense approach and as an example, which one of your friends would you rather lend money to:
a. Joe, who makes $60,000 a year and has perfect credit, but has $50,000 in credit card debt and is living paycheck to paycheck, or
b. Jim, who also makes $60,000 a year and just filed for bankruptcy, and now has ZERO debt.
SHOULD I FEEL BAD FOR FILING BANKRUPTCY?
The simple answer is that you should not. Why should you? If you were a big big business (AIG, General Motors Corporation, Chrysler, and Bank of America) and you ran into financial trouble, then you did not need to file for bankruptcy. You would get preferential treatment from the government, and they would bail you out. While it would be nice if everyone could get bailed out by the federal government, but for most individuals, the only realistic and legal alternative, is to file a bankruptcy case.
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