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Important Tips For People Considering Bankruptcy

If you find yourself considering bankruptcy, you are probably feeling financially boxed in and at the end of your rope. Filing bankruptcy can certainly be scary, so to help you feel more in control of things, be sure to educate yourself about the entire bankruptcy process before making your decision. You may want to explore alternatives to filing bankruptcy. Learn the requirements you have to meet before applying for bankruptcy. Learn about the bankruptcy process before you file for bankruptcy. Finally, learn how your future will be affected after completing bankruptcy.

Pre-filing Tips for People Considering Bankruptcy

Keep your debts to a minimum before filing. If you are planning on filing for bankruptcy, don’t run up your debts. Your credit and financial history will be checked by judges and creditors, and if it looks as though you are trying to cheat the system, you may not be able to wipe out those debts.

A huge mistake people make before filing for bankruptcy is maxing out their credit cards. This can lead to disaster when you file and the credit card companies might not discharge the debt. If you can, you need to stop using your credit cards at least six months before you file, and ideally for a year earlier. Also, do your best to pay the minimum payments on these cards for at least six months before you file. The better your credit history appears before you file, the easier it will be to get new credit after the bankruptcy is completed.

Consider Filing Bankruptcy Without a Lawyer

Filing for bankruptcy does not need you to hire lawyer, and most people considering bankruptcy will be happy to know they can easily complete the bankruptcy process using the services of an experienced non-attorney bankruptcy petition preparer. The bankruptcy paperwork is quite voluminous and using a bankruptcy preparer to help you will give you some degree of relief to know, that a professional will be helping you along. Take your time, and choose a bankruptcy petition preparer with a lot of experience in the field and with good reviews from other people. Unfortunately A People’s Choice no longer offers bankruptcy document preparation services.

Reaffirming Debts You Want to Keep

People filing for bankruptcy will not automatically lose their car, house or other large items that have loans on them. A person filing bankruptcy has several options for these types of debt –  they can return the item and not owe anything further, or they can keep the item and continue to pay on the loan attached to the item. If you wish to keep the item, however, you must continue to make the payments on time to avoid repossession by the lender. If the payments are too much to handle, sometimes creditors are willing to renegotiate the loan and offer a lower monthly payment. This is not always the case and you should make sure that you have the financial ability to pay the ongoing monthly payments for debts that you reaffirm (agree to continue to pay). If you reaffirm a debt in bankruptcy and later realize you are unable to make the monthly payments, the creditor can then sue you for the remaining balance due.

Life after Bankruptcy

Filing bankruptcy can have an affect on your personal finances. However, after your bankruptcy is completed, don’t be afraid to apply for credit for purchases such as a new home or car just because you have a recently discharged bankruptcy. Many lenders will take your new financial situation into account. They may be more likely to loan money to someone who has no debt due to a bankruptcy than to the person with, say, $30,000 in credit card debt. The fact that you have no monthly credit card payments can make you look like a better risk. Some lenders and credit card companies will take that into consideration, although you may pay a substantially higher interest rate for that credit.

You may still have trouble when you apply for unsecured credit after a bankruptcy. If that is the case, you should try applying for one or two secured credit cards. This will show creditors you are serious about getting your credit record back and in order. After a while, you may be able to get unsecured credit again.

Will filing bankruptcy hinder any chance of purchasing and owning your own a home? This is one of the most common questions asked by debtors considering bankruptcy. For many debtors, filing a personal bankruptcy unfortunately becomes a vicious cycle of financial irresponsibility every 8 years. For some, however, filing bankruptcy is an important wake-up call  and they acknowledge the ramifications of their previous financial behavior and begin to live within their means. They quit overspending, create a budget, and start paying their expenses on time. It gives them an opportunity to check their credit score and take action to improve that score over time. If you are considering filing for bankruptcy, want a fresh start and want to focus on making the necessary changes and financial corrections needed to get you on the right track, the good news is that, with a little planning, you will be able to ultimately buy a home when the time comes.

By |2018-01-18T15:47:47+00:00February 8th, 2015|Bankruptcy|0 Comments

About the Author:

Sandra M. McCarthy, founder of A People’s Choice Inc., has worked exclusively in the legal field since 1976. She served as the 2004-2005 President of CALDA (California Association of Legal Document Assistants). She obtained a Paralegal Certificate from the University of California, Santa Barbara. During her career in the legal field, she has worked as a freelance paralegal, law office manager and paralegal studies teacher, and has co-authored numerous legal publications and written hundreds of self-help legal articles. As a registered Legal Document Assistant, Sandy is dedicated to providing affordable, low-cost, self-help document preparation services for California consumers in all 58 counties.

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