If you are unable to keep up with your debt payments, the delinquencies will be on your credit report, but they do not stay there forever. The credit reporting agencies stop including most types of delinquent debt after seven years. This can sound like a very long period of time, and it is significant, but you may still be able to obtain credit even if there are collection accounts on your credit report. Plus, according to the credit reporting agency Experian, if you were to pay off accounts that are in collections, in many cases they would have less of a negative impact. In fact, under currently utilized methods, collections that have been paid may not have any negative effect on your credit score at all.
As bankruptcy attorneys, we assist clients who are struggling with overwhelming debt. There two different types of bankruptcies that are most frequently used by individuals: Chapter 7, and Chapter 13. A Chapter 7 is a liquidation bankruptcy. If you have any nonexempt property, it would be liquidated by the trustee, and the proceeds would be used to pay your debts. However, in most of these cases, there is no property to sell, so there are no losses. The unpaid debts would be discharged, and the creditors would be unable to seek payment going forward. This type of bankruptcy remains on your credit report for 10 years.
A Chapter 13 is a reorganization bankruptcy. You would be required to file a Chapter 13 rather than a Chapter 7 if you have enough disposable income to make payments on all or some of your outstanding debt. You make payments for 3 to 5 years when you opt for a Chapter 13 reorganization. The debts will be discharged if you keep your payments current throughout the duration of the term. A Chapter 13 bankruptcy stays on your credit report for seven years.
When it becomes apparent that you are not going to be able to keep up with your debt payments, you have decisions to make. The optimal course of action will depend upon several different factors. Since there are multiple ways to proceed, it is wise to discuss your options with a licensed bankruptcy attorney. A bankruptcy is often going to be the right choice, but there are other possibilities.
Our firm serves clients in many different cities in the state of Oregon, including Medford, Eugene, Portland, Grants Pass, and Salem. We also have offices in Tacoma, Vancouver, and Tri-cities in Washington. The attorneys at OlsenDanes are always standing by to assist if you would like to come in for a case evaluation, and these initial consultations are offered free of charge. If you are ready to make the connection, call us right now at 1-800-682-9568.