File bankruptcy? .... But I have such a good credit rating!

As the Bankruptcy Paralegal here at Bacon Wilson, P.C., I have met with many clients who say this same thing, "I want you to know that I have a good credit rating."

Every time a client tells me this, I nod my head in agreement. Clients do not realize that the majority of people who file for Bankruptcy have a good credit rating. They always pay minimum payment required on time, which is all that is necessary to keep in the "good graces" of the credit card companies.

Many individuals and families have become so accustomed to juggling their monthly bills that it becomes a routine. This routine can go on for many years, until something unexpected happens to them or their family.

For example: loss of a job, or one spouse is injured at work or in an auto accident, and suddenly one pay check is either reduced or gone for several months. These situations lead to one missed or late credit card payment, and then your fixed percentage rate on your credit card is changed to a higher percentage rate, (lately the average has been 30%,) and you incur a late fee or an over limit fee on your credit card. This can result in the monthly credit card payment doubling or tripling, making it impossible for most people to pay the bill.

Some clients try to find a way to keep paying their credit card bills. They cut down on the things that are not necessities such as cable, internet, cellular telephones, eating out, or even trading in a motor vehicle for another car that is more economical. This can work for a period of time, but eventually even though you have cut down on certain things, you still have the stress of paying the monthly credit card bills.

Filing for bankruptcy is not necessarily a negative. It can be a positive solution to financial difficulties. Many of our past clients were able to purchase homes and new cars just a year or two after filing for bankruptcy, which they were unable to do with all the debt listed on their credit reports.


by: Gina P. Ottomaniello