The Atom Bombs of Bankruptcy

Many of you feel like an atom bomb has been dropped when your credit rating crashes down after filing bankruptcy. What could be worse? A creditor getting a judgment against you and asking for a debtor’s exam.

A debtor’s exam occurs when a debtor is legally called into a court by a creditor who has a lawsuit judgment against the debtor. The debtor is sworn in and asked to provide the judgment holder with answers about the debtor’s assets. The questions include details about the debtor’s assets. If the debtor refuses to answer the questions while on the witness stand or refuses to answer the subpoena to appear, he or she could be arrested for contempt of court.

This personal bankruptcy story was posted on the internet in January of 2011:

“My wife and I were forced into bankruptcy. A collection company called us into a debtors exam to find out where I work and find out everything we own so they could put a lien on it. I had a job loss and was trying to recover and got socked with this debtors exam.

I tried to avoid bankruptcy at all costs, but it was coming down to the collection company taking food out of my 5 kids mouth and our basic needs being taken from us. I filed bankruptcy in October and my qualifying debts were discharged in December. It has dropped an atom bomb on our already crappy credit but it gave us a new start and drove the snakes away!”

Bankruptcy is difficult. The debtor alludes to an “atom bomb on an already crappy credit.” The imagery used by the debtor may sum up how many people feel about what happens during a bankruptcy, but his observation is an exaggeration. He may have felt like his credit rating going so low hit him like an atom bomb, but in reality, the debtor’s exam is what forced him into bankruptcy protection, not his credit rating.

By the time most debtors go bankrupt and have lawsuit judgments filed against them their credit scores are already low. Filing bankruptcy may lower a credit score to the 400’s if a debtor had credit before he or she went bankrupt. In the case of the illustration, the debtor was already past bankruptcy and into lawsuit judgments that could have certainly lowered his score to 400 or less.

There are reasons for having zero credit, but bankruptcy is not one of them. Credit reports simply don’t work that way. A zero credit score occurs because you have no credit history at all. This can happen because you reported identity theft, never used credit, have been convicted of a felony, or you have not had any credit in the past seven years.

You can live without a credit score. Credit scores can also be restored after filing for bankruptcy protection, especially if you pay your bills on time. Creditors who see your bankruptcy on a credit report know you cannot file again for up to eight years, and if you are paying your bills on time, a bankruptcy filing can be viewed as a positive step in eliminating your financial problems. Many credit companies will take a risk on people who legally take responsibility for their financial problems.

If you have been forced into bankruptcy by a debtor’s exam, contact a bankruptcy lawyer. If you need relief from the stress of debt and you live in or around the metropolitan counties of Nassau or Suffolk, New York, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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