Category: Bankruptcy

Why Are There So Many Bankruptcies in Atlanta?

Atlanta, Georgia

How ATL Residents Cope With a Local Economy That is Working Against Them

Atlanta is experiencing record employment numbers, so why is it home to so many bankruptcies?

The statistics speak for themselves:

  • 45,872 bankruptcies in Georgia last year (BLS)*.
  • Georgia has the 3rd most bankruptcies in the country — surpassed only by California and Illinois (BLS)*.
  • Almost a quarter of Atlanta residents have filed for bankruptcy ( Lexington Law)**.
  • 21 percent of ATL residents are in debt due to medical bills and lacking health coverage (Lexington Law)**.

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How Does a Discharge of Bankruptcy Affect My Credit?

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There are a hundred different reasons consumers take the drastic step of declaring bankruptcy: spiraling personal debt, the long-term impacts of a job loss or divorce, or even just to get a fresh start after years of financial issues.

While bankruptcy can help put some distance between you and the ghosts of your financial past, the impact on your credit score (and credit history) isn’t always as cut and dry as some consumers may believe.

A bankruptcy discharge — which legally releases debtors from debt incurred before filing bankruptcy with the court — does not always result in a complete reset and restart of your credit history. That involves some dedicated work to help build new credit after bankruptcy.

The Seven-Year Itch

A Chapter 7 bankruptcy filing may remain on your credit history for 10 years, while a Chapter 13 bankruptcy filing may be listed on your credit history and credit reports for seven years.

Ongoing financial responsibilities such as credit cards balances, medical bills or other debts specifically covered by the discharge will likely report as “included in bankruptcy.” However, any associated history of late payments, heavy utilization or simply having too many active cards and accounts can remain on your account.

Items included in bankruptcy that were associated with the discharge will likely continue to appear on your credit report for up to seven years from the initial date of delinquency.

As a result, creditors won’t necessarily see that your financial history has been “wiped clean” overnight. Despite what you may hope, a bankruptcy filing will not mean an automatic increase in your credit score, if debt has dragged you down in the past.

Lasting Effects of Bankruptcy

Your full credit history will be a factor in any creditor’s decision to offer you a new credit card, a line of credit, or a car loan. A public record of bankruptcy, even one that is fully discharged, can catch the eye if you’re applying to lease an apartment or even putting in a job application, both of which often require credit reports as part of a background check.

Keep in mind that bankruptcy will not release you from all debt obligations. Student loans, back taxes and alimony/child support, which cannot be discharged in bankruptcy, will continue to be a consideration in your credit report.

But, there is hope. Anything you do in your post-bankruptcy future will help rebuild your credit score. Over time, bankruptcy records shown on your credit report will become less and less important. Many creditors are willing to give post-bankruptcy consumers a second chance with a new credit card (often a secured card), though chances are you’ll be paying a higher interest rate or be given less access to credit until your credit score increases.

Don’t wait until it’s too late. Seek out professional credit repair before the lasting effects of bankruptcy loom over your finances. You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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Bankruptcy: To File or Not to File

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Disclaimer: As trusted leaders in credit repair, Lexington Law Firm is a consumer advocacy firm with a focus on helping consumers repair their credit. Lexington Law does not practice other specific areas of law, and any information provided on this blog is strictly for informational purposes. Please consult with an attorney in your state to determine what may be applicable to your individual situation.

Bankruptcy. A creditor detests it, until in need of its protection. A debtor avoids it, until it’s often too late. It is so easy to avoid planning for a bankruptcy until you are suddenly faced with that difficult choice due to your credit situation. For in bankruptcy, judgment day — in a strictly legal sense — may literally arrive ever so unpredictably as the result of a fleeting former lifestyle. To help you in your journey, this article will address some important factors to consider in determining whether or not bankruptcy would be applicable to you.

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How To Repair Your Credit After Bankruptcy

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Filing for bankruptcy could lead to a significant drop in your credit score, but if you act properly once it’s all over, it doesn’t have to stay that way. After you are discharged from bankruptcy, there are a few measures you should take to help bring that score back up.

 

How bankruptcy affects a credit score:

According to FICO, bankruptcy can lower your score by as much as 240 points. The drop is so large because FICO categorizes bankruptcy under payment history. Payment history is also FICO’s most important factor in determining a credit score.

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North Carolina Bankruptcy by County

North Carolina bankruptcy top 10 banner

In a previous post we took a look at how bankruptcy rates were more common in some regions than others. The reasons pointing to bankruptcy varied, but economic factors were one issue that played a major role. For example, southern states have a greater prevalence of bankruptcy, while more poverty-stricken areas also see increased rates of bankruptcy.

And while looking at the nation as a whole is important for putting this fiscal condition into perspective, we felt we could go a bit deeper and focus more specifically on states. In this piece, we’ll take a look at North Carolina.

Not the worst
North Carolina is not at the bottom of the pile when it comes to bankruptcy-ridden states. In fact, it fares better than many, with an average of 16.71 bankruptcy cases per 10,000 residents. This doesn’t put the state anywhere near the top. However, there is no denying that bankruptcy exists, and with a steadily growing population, which is currently at almost 10 million people, the state of North Carolina should be aware of which areas are being hit by bankruptcy the hardest.

North Carolina Bankruptcy Top 10 Map

The best way to do this is to break the state down by county, providing the 10 best and 10 worst pertaining to bankruptcy rates. As you can see, Northampton is far and away being hit the hardest by bankruptcy issues. Averaging 135.80 out of 10,000 residents, this county is far above the number two county, Granville, which has 78.42. From there the gap gets smaller and more gradual.

At the other end of the scope, you’ll see Washington county takes the top spot with only 3.14 bankruptcy cases out of 10,000, just underneath Hyde County with 3.50. However, it is important to note that not all bankruptcy filings are the same, as no two financial situations are alike. So while these numbers display how many bankruptcy cases there have been, specifics are needed to further investigate what these numbers actually mean. On the other hand, concentrated cases certainly demonstrate a trend, which is alarming to many financial professionals.

See the complete North Carolina county list here:North Carolina Bankruptcy Rank Chart

What to know about bankruptcy

Filing for bankruptcy can help individuals remove debt they are unable to pay back. While there are many causes for bankruptcy, it is important to know that filing for bankruptcy is not the only option for eliminating debt. Only when individuals or businesses reach a financial position without options is bankruptcy turned to.

That being said, the process can certainly assist individuals getting back on their feet. While it stays on a credit report for some time and can make it difficult to attain loans or large amounts of credit for some time as well, it can also help alleviate a dire situation.

There are also different types of bankruptcy, as it is not a one-size-fits-all process. And which bankruptcy type a consumer files (often Chapter 7 or 13) can dictate how long it stays on a credit history. But in the end, bankruptcy removes debt and allows people to move on with their lives.

Methodology

County bankruptcy rates are from March 31, 2014 to March 31, 2015. Those data were sourced from a database of bankruptcy filings offered by the U.S. Federal Courts (uscourts.gov). We included all bankruptcies, both by businesses and individuals, including Chapter 7, 11, and 13 filings.

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