By John Scruggs
Bankruptcy is the unfortunate situation that more and more people are finding themselves in today because of the terrible economic conditions. You might be one of those people, and if you are, chances are you feel hopeless. However, this does not have to be the case; because, although the road to recovery from bankruptcy may not be easy or simple, it is in fact doable. Consider the following advice for those who are about to file for bankruptcy or those who are suffering because of a recent bankruptcy filing - it may be helpful.
When you do file for bankruptcy, it is extremely important to speak with your creditors about you situation so they know what is happening. There are certain assets that are non-exempt from the bankruptcy process, including cash and certificates of deposit, and you will be required to return these assets to your court-appointed trustee. This is typically the first part of the many steps required for bankruptcy, though, the next steps should focus on recovery so that you can create the best financial future possible for yourself, despite the circumstances.
Do not be surprised if you find it tough to get a loan for the next few years, because most lenders out there are most likely skeptical about lending to someone who has recently filed for bankruptcy. Most people with a bankruptcy on their record will not be able to qualify for a home or car loan. However, if they do manage to qualify for a basic loan or a credit card, typically the interest rate will be extremely high.
Although, it may seem hopeless, what you do after bankruptcy can make the difference in your credit and your financial future; so, try your best to remain positive. A positive attitude will go a long way in a bankruptcy situation, even though you may not think so. There is so much truth to the theory, "the power of positive thinking," so apply the theory to your situation and use it to your advantage.
If you own a car and are still making payments, consult with your lending about signing a reaffirmation agreement. This agreement states that you want to continue making your continue making car payments and, therefore, keep the vehicle. Keep in mind, however, if you do not make your payments, your car will be repossessed and sold - you will be liable for any deficiency. Yet, with you sign the agreement, it acts as good faith and gives you more flexibility when working with your lender.
Obviously, even though it will be difficult, you will want to establish new credit accounts to create positive credit for the future. It will be difficult to get traditional banks to offer you credit, however, there is always the option of depositing money into an account and having a credit card attached to that account - also known as a secured credit card. For many this does not seem like the best option, however it does help build credit and therefore is a wise choice when it comes to establishing credit for the future.
In addition to getting access to new credit, you are also going to want to access your credit reports and make sure they are clean. The credit bureaus - Equifax, Experian, and Trans Union - should show that your debts have been discharged due to bankruptcy. If they do not show this, than you want to make sure that you speak with them about updating the report.
While you are seeking to re-establish your credit, it is important to resist co-signing for anyone. Although co-signing may seem harmless, if the loan goes bad, it will be on your record for awhile and their will be a judgment against you, especially because of the bankruptcy on your record. When it comes down to it, the risk is simply not worth it, even if you think it will help you build your credit.
Also, when it comes to credit cards, do not carry a balance if you do not have to. Many people assume that a credit card balance is good for your credit, however it is not smart for your financial future because you never know what financial emergencies could come up and get in the way of your ability to make payments. Therefore, if you can, pay the balance in full.
When you do file for bankruptcy, be aware that people will ask you about it, even though you might feel as if it is an invasion of privacy. Many crazy people file for bankruptcy, and chances are you are normal, just going through a difficult time; so, you should be willing to explain this to people, especially creditors so they do not wonder. Get your story straight so you know what to tell people regarding your situation.
Remember, life happens, and if for you bankruptcy is a part of that, oh well. Be positive and move forward. Recovery is a process, but it is possible.
About the Author:
Bankruptcy is the unfortunate situation that more and more people are finding themselves in today because of the terrible economic conditions. You might be one of those people, and if you are, chances are you feel hopeless. However, this does not have to be the case; because, although the road to recovery from bankruptcy may not be easy or simple, it is in fact doable. Consider the following advice for those who are about to file for bankruptcy or those who are suffering because of a recent bankruptcy filing - it may be helpful.
When you do file for bankruptcy, it is extremely important to speak with your creditors about you situation so they know what is happening. There are certain assets that are non-exempt from the bankruptcy process, including cash and certificates of deposit, and you will be required to return these assets to your court-appointed trustee. This is typically the first part of the many steps required for bankruptcy, though, the next steps should focus on recovery so that you can create the best financial future possible for yourself, despite the circumstances.
Do not be surprised if you find it tough to get a loan for the next few years, because most lenders out there are most likely skeptical about lending to someone who has recently filed for bankruptcy. Most people with a bankruptcy on their record will not be able to qualify for a home or car loan. However, if they do manage to qualify for a basic loan or a credit card, typically the interest rate will be extremely high.
Although, it may seem hopeless, what you do after bankruptcy can make the difference in your credit and your financial future; so, try your best to remain positive. A positive attitude will go a long way in a bankruptcy situation, even though you may not think so. There is so much truth to the theory, "the power of positive thinking," so apply the theory to your situation and use it to your advantage.
If you own a car and are still making payments, consult with your lending about signing a reaffirmation agreement. This agreement states that you want to continue making your continue making car payments and, therefore, keep the vehicle. Keep in mind, however, if you do not make your payments, your car will be repossessed and sold - you will be liable for any deficiency. Yet, with you sign the agreement, it acts as good faith and gives you more flexibility when working with your lender.
Obviously, even though it will be difficult, you will want to establish new credit accounts to create positive credit for the future. It will be difficult to get traditional banks to offer you credit, however, there is always the option of depositing money into an account and having a credit card attached to that account - also known as a secured credit card. For many this does not seem like the best option, however it does help build credit and therefore is a wise choice when it comes to establishing credit for the future.
In addition to getting access to new credit, you are also going to want to access your credit reports and make sure they are clean. The credit bureaus - Equifax, Experian, and Trans Union - should show that your debts have been discharged due to bankruptcy. If they do not show this, than you want to make sure that you speak with them about updating the report.
While you are seeking to re-establish your credit, it is important to resist co-signing for anyone. Although co-signing may seem harmless, if the loan goes bad, it will be on your record for awhile and their will be a judgment against you, especially because of the bankruptcy on your record. When it comes down to it, the risk is simply not worth it, even if you think it will help you build your credit.
Also, when it comes to credit cards, do not carry a balance if you do not have to. Many people assume that a credit card balance is good for your credit, however it is not smart for your financial future because you never know what financial emergencies could come up and get in the way of your ability to make payments. Therefore, if you can, pay the balance in full.
When you do file for bankruptcy, be aware that people will ask you about it, even though you might feel as if it is an invasion of privacy. Many crazy people file for bankruptcy, and chances are you are normal, just going through a difficult time; so, you should be willing to explain this to people, especially creditors so they do not wonder. Get your story straight so you know what to tell people regarding your situation.
Remember, life happens, and if for you bankruptcy is a part of that, oh well. Be positive and move forward. Recovery is a process, but it is possible.
About the Author:
Avoid bankruptcy and save your credit rating through home loan restructuring.
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