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How Bankruptcy Affects Your Credit

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If you have trouble paying your bills and you don’t see any end in sight, you may have to file for bankruptcy. That can wipe away your debt in many cases, but it will also affect your credit. Before you make a decision on whether you should file for bankruptcy, you should be clear on what will happen to your credit when your bankruptcy is discharged. If your bankruptcy lawyer hasn’t explained that to you, be sure to ask questions and get the answers that you’re seeking. It’s up to you to be able to make an informed decision, since it’s your credit.

Generally, people who file for bankruptcy have struggled with their debt for a while. They likely already have credit problems. Filing for bankruptcy, though, could still cause their FICO credit score to drop significantly. To get information about credit and help with bankruptcy issues, visit www.ClearBankruptcy.com. There’s no way to go through bankruptcy without hurting your credit score, but you’ll want to minimize the damage as much as possible.

Once your bankruptcy has been discharged, you can focus on how to rebuild the credit you had before things started going wrong. The bankruptcy will stay on your credit record for 10 years in most cases, but that doesn’t mean you won’t be able to have a decent credit score for that length of time. If you’re careful after your bankruptcy, you can generally rebuild your credit to an acceptable level in around three years. That will allow you to purchase a home or a car, or get an unsecured credit card. Either of those options will further strengthen your credit.

Filed Under: Financing Tagged With: , ,

Proper Filing for Bankruptcy

A sad series of events yields a sadder consequence: debt has gathered and credit has tumbled. Now, there are no dollars left within a bank account. Finance has proven to be too great a foe to battle and bankruptcy now seems to be the only solution.

Filing for bankruptcy does not have to be financial defeat, however. There are other elements to consider:

Recognize Alternatives

The notion of bankruptcy is not defined to impulses. Filing can’t be attempted on a whim. Individuals must recognize the available alternatives, such as seeking any financial help that can eliminate the need for individual bankruptcy. Debt consolidation, payment plans and counseling should all be pursued. Only when these prove to be ineffective should bankruptcy be chosen. It can’t be thought of as a necessity (like ). It must instead be viewed with caution because bankruptcy can do major damage to your credit picture.

Note Expenses

Attempting to file for bankruptcy isn’t an easy process. If you are losing your home due to bankruptcy, it is important to keep your home insurance current. That is a major concern for homeowners who are either losing or selling their homes due to financial crisis. Home insurance will protect you while you are still in the home, or even while the home is vacant, until the property is no longer in your name.

If you are renting out a property that you own, you should definitely apply for or keep your landlord insurance current. This will ensure the property is protected while your tenants are occupying in, in case of damage.

Seek Professional Support

There are times when efforts simply aren’t enough. If filing bankruptcy must occur, it should be done with the support and advice of professionals. You should definitely seek professional advice before making a decision. This will help make the process safer and easier for you.

The process of filing is a complicated one. It should only be attempted after all other options have been exhausted, and all financial alternatives have been considered.

Filed Under: Financing, General Tagged With: , ,

Steps for Filing Bankruptcy

The decision to declare bankruptcy is a very important one. This decision will affect you and your family for years to come, so consider all your options. If you find that filing for bankruptcy is necessary, there are steps to take to ensure it is done properly and with everyone’s best interest in mind.

  1. Look for bankruptcy resources. At www.totalbankruptcy.com, you can get the information needed to make an informed decision. Online resources can help you determine what type of bankruptcy to file and can help you determine whether filing is your best option.
  2. Make sure that you check into other debt-solving solutions.
  3. Take responsibility for your debt. If you aren’t honest with yourself, you may find that bankruptcy doesn’t solve your financial problems.
  4. Gather all the important information. Write down your debts and any money you have coming in. Record any investments or assets that you have that may help pay off your debt. Having all the necessary information will help down the line.
  5. Consult a bankruptcy attorney. An attorney knows the laws and will be able to guide you through the process.
  6. Attend debt counseling. The court requires this before it will consider any bankruptcy petition. Learning the proper way to handle your money, as well as your debt, is a powerful tool in taking your financial life back.
  7. File for bankruptcy. You will need to submit an official bankruptcy petition to the court.

Once you file, you will have to follow state and judicial requirements, such as attending a meeting of creditors. Depending on your situation, you may need to take additional steps to file.

Filed Under: Business, Financing Tagged With: , ,

Life After Bankruptcy

Now more than ever many people are considering filing for bankruptcy.  The economy is tough and handling personal finances is getting trickier by the day.  Many people are choosing to file a Chapter 7 bankruptcy as it will literally wipe out all debts, save a few exceptions.  This is usually preferable to those people who do not have a lot in the way of assets.  Chapter 13 bankruptcy allows you to create a repayment plan, usually for five years, to repay much of the debts you owe.

Bankruptcy is a long and sometimes drawn out process and can be tough on your family and your finances.  A Chapter 7 bankruptcy will literally give you a fresh start so that you can build yourself back up again much faster than with other methods of bankruptcy.  Once you file for Chapter 7, a stay is issued by the court that blocks creditors from calling and harassing you anymore. You can liquidate most of your debts and begin your new financial future almost the minute your bankruptcy is filed and finished.

While any type of bankruptcy will stay on your credit report for years, it is important to take steps to repair your credit as soon as possible.  This will show future lenders that you worked hard even with the bankruptcy holding you back.  One of the most popular methods of beginning to return your credit back to its former glory is to utilize a secured credit card.  This will slowly build your credit.  Life after bankruptcy can be daunting, but not insurmountable.

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Some Assets Can Be Protected From Bankruptcy

Even as 2011 is being sited as the year that the recession will officially end, many people are still feeling the effects of economic turmoil.  An estimated 1.6 million people filed bankruptcy by the end of 2010.  The most common reasons listed were a reduction in income or job loss.  When it comes to the bankruptcy court, consumers who have been conscientious borrowers and spenders, are no different than those who haven’t been.  Generally, it just means they have more to lose.  The rules on how much and what filers can keep during a bankruptcy varies from state to state.  Sixteen states offer a federal “wild card” which gives each person named in the bankruptcy a $12,000.00 credit that can save their car or some of their valuables.  When filers own more on their cars or homes, than they are worth, the bankruptcy courts won’t take them, as they won’t yield enough profits to pay off the creditors.
Whether or not a filer is able to keep their home during bankruptcy is up to the state they live in.  But in most states if they have no equity they will be allowed to keep it as long as they are able to continue making payments.  Most states offer an exemption to those filers who do have equity in the homes.  The exemption is a set amount of money, varying by state, that the homeowner gets from the sale of the home.
In most states, 401(k)s and retirement funds are safe from creditors.
Most states offer an exemption for cars as well.  Filers who have a car that is paid in full or has a fair amount of equity in one they are making payments on, will lose the car and just get back the amount of the state’s exemption.
Life insurance and college savings plans are other assets that are regulated by each state’s bankruptcy laws.  Some offer total protection, while others offer an exemption.

Filed Under: Financing Tagged With: