Debt-Free Is the Way to Be
Video Transcribed: Good afternoon, everybody. OKC bankruptcy attorney Edward Kelly here, with video four in our series on an intro to Chapter 7 in our larger series Three Minutes to Financial Freedom.
Every video is three minutes, and every video gets you closer to being debt-free and free financially, living the life you want to live. So we talked about in video one, what is Chapter 7. It’s a deal. Give up your debt in exchange for any property that is not protected, hopefully, none. Second, we talked about the process of bankruptcy, who qualifies, the means test cap and how you can bring yourself back down under it, and how you can only do bankruptcy every eight years. In video three, we talked about how long does it take? 90 days. There’s a creditor meeting at 30. Couple of things you need to do after that. And then 90 days, like clockwork, discharge and done.
We’re going to talk today in video four. Okay. So I’ve been discharged. What do I do now? Well, a couple of things, and there are various schools of thought. But what I tell my clients is, of course, if debt got them into this mess, going into debt again is not a great idea. And remember, you can only do this every eight years. So if you jump into a big card debt, sign a new car note, take another credit card, or get yourself back in trouble, you’re not going to be able to bail again in this way for at least eight years. And a lot of lenders know that and may extend your credit knowing, “Okay. This person cannot file bankruptcy even if they want to, at least not a Chapter 7.” So you want to be careful about debt. I have heard from many different sources, reputable sources, it can be advantageous to have one credit card. And some people will say to pay it off every month.
But my understanding is if you run about a 30% balance, never above that, and make your payments on time, pay down anything above that 30% balance. For example, if you have 10,000, don’t go above 3,300. Try to keep it there and don’t go below it so that you’re at the sweet spot for credit reporting and getting your credit back up. You’ll be surprised after your bankruptcy, your credit score, if it was terrible, will probably improve because your debt-to-income ratio, meaning how much income versus how much debt, has been perfected. And that’s half of your credit score. If you had high credit, maybe you’re going to take a hit. But in the long run, that debt-to-income is only going to help you. Because now you’ve got all this income, all that debt’s gone.
So just beware of any further debt. The goal here is financial freedom, living without debt, having the income that you dream of and deserve without encumbering it with debt, and living the life that you want. So that’s our Three Minutes to Financial Freedom.
For more information, you can contact me, a chapter 7 lawyer in Oklahoma, at oklahomacitybankruptcyattorney.pro.