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Credit repair; should we declare bankruptcy

Vacaville, CA |

My home was forclosed on in 2008 and a car repo'd. Our income changed dramatically, negatively during that time. We want to rebuild our credit, and try and repurchase something in the next 5-10 years. Should we declare bankruptcy now. We have the forclosed home, the second is calling us daily and the repo'd car loan calling us among other bills. We declared bankruptcy in 1998 and don;t want to be 2 time losers, but think this might be best for us now. Help?

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Attorney answers 4


At a minimum, you should strongly consider filing bankruptcy. You do not have the ability to pay back the debts that you are currently carrying so your alternative to filing will be staggering along with a low credit score and creditors at your heels for the remainder of your lives.

If you do file bankruptcy, you will be able to clear your debts and start over. While your credit score may bottom out in the months to come, you should be able to build a good credit score within the next two years. While the bankruptcy will be on your credit report for close to a decade, its ability to negatively impact your credit score if more fleeting than you might think. I would strongly urge you to consult with a bankruptcy attorney in your area prior to filing.


Bankruptcy is always an option for any person in heavy debt. However, it is not the only option. You stated that you are currently in the foreclosed home. If no judgment of foreclosure has been entered you should consider asking the bank for a consent foreclosure. A consent foreclosure handled by a competent attorney will result in no personal liability on the first mortgage (no deficiency). However, there would be a judgment entered against you but it would only be non-monetary. If there is a second mortgage then you would have to settle with them if you want to avoid bankruptcy. It seems like your credit has already taken a beating and improving your credit is goint to be an uphill battle. Atleast with bankruptcy you can start rebuilding credit with absolutely NO debt. Furthermore, keep in mind that if your income increases in the future you may no longer be eligible for a Chapter 7. There are a lot of variables in your situaton and you need to consult a competent bankruptcy attorney to evaluate your current situation.


People who file bankruptcy are not losers, they are folks who have accepted that they cannot satisfy their creditors with their limited resources and need to move on with their lives and not pretend that everything will be rosy again if they just "stick it out." If your debts are over two years old, there is a chance that these companies may see that you are unable to pay and not bother suing you. Once the statute of limitations expires on those debts (typically three or four years from the date of your last payment), you don't owe it and they may not get a judgment against you on the debt.

Thus, the decision is yours to (a) wait and see if they will allow the debt to become unenforceable in court, or (b) file bankruptcy now. Either way, you are not a loser.


I would not call you a two time loser. I prefer a victim of the economy.

Based on your case description, it would appear you and your wife are Chapter 7 banruptcy eligible and that you would benefit from the fresh start afforded you. I can provide the assistance you need and would encourage you to call my office at your convenience.

Good luck!