Financial Disarray: How to Get Out of Bankruptcy
Bankruptcy can be a useful tool for resolving debt and wiping your financial slate clean. However, that is not to say that there are no consequences for filing. The good news is that it is possible to start climbing out of that hole as soon as possible as you only want to be in a state of bankruptcy for as little of time that is needed. Bankruptcy is fun for no one involved as it is a stressful experience mentally and financially.
Make Sure That You Have an Attorney
Before, during and after a bankruptcy, make sure that you have an attorney representing you. Your attorney will make sure that you are treated fairly during the bankruptcy process. He or she may also be able to go over your finances to determine if you need to declare a full or partial bankruptcy to get past your debt woes. Your attorney can help keep creditors off your back and prevent your banker from giving you an unfair deal. Remember that even though it may honestly appear that your banker is trying to help you (and in many cases they probably are) remember that they too have a job to do, even if that means giving you a seemingly unfair deal. You are paying a lawyer to represent you and because they represent you, they will have your best interest at heart and will always be in your corner until you stop paying them. With that said, consider hiring a lawyer to help you through from beginning to end of your bankruptcy process.
Note the Discharge Date
The first thing that you need to do is to note the date that your bankruptcy is discharged. This is because your discharge date is what lenders will use when determining when you are eligible for loans. It will also determine when the bankruptcy will come off of your credit report. Those who filed for Chapter 7 bankruptcy will see it on their credit report for 10 years while Chapter 13 bankruptcies come off after seven years (Source: McLay & Company Inc. Trustee In Bankruptcy).
Start Applying for Secured Lines of Credit
Secured credit cards enable you to start rebuilding your credit score and history. If you are able to make payments on time, you can convert the secured line to an unsecured line. This usually takes 12 to 24 months of consecutive timely payments. If your line of credit is converted from secured to unsecured, you will get your security deposit back plus interest.
Learn From Your Previous Mistakes
If you were forced into financial ruin because of your dependence on credit cards, it may be a good idea to put them away. If you have a hard time resisting the urge of an impulse buy, you should think about putting money on a prepaid debit card. This ensures that you can stick to your intended spending limit wherever you go. You can also split your paycheck between a spending account, an account to pay bills and an account that you don’t touch.
If you have been in financial ruin in the past, it doesn’t mean that you have to be in financial ruin going forward. The goal is to figure out how you can resolve your debt, rebuild your credit and make better financial decisions in the future to keep yourself out of debt, but if for some reason you must go back into debt be sure to make sure it is for a good cause like going back to school or buying a house. Even in these circumstances you will want to keep out of debt or at the very least your keep it to a minimum. Just keep the principles above in mind and you will be ok financially in the end.
Category: Bankruptcy
