What You Need to Know About Bankruptcy

What You Need to Know About Bankruptcy "Now that Christmas has passed, many consumers are beginning to reconsider their holiday credit card debt. With the new year rapidly approaching, many bankruptcy attorneys anticipate a very busy 2011 year. Many anticipate that the number of bankruptcies filed in 2010 will surpass all previous records. With unemployment remaining at 9.7 percent, it is not anticipated that the bankruptcy rate will decrease anytime soon. The only thing that will help a consumer get out of debt is filing for bankruptcy. If you are unemployed and unable to pay your credit card debt, you may have excellent reason to consider Chapter 7 or Chapter 13 bankruptcy. Depending on the circumstances of the debtor, both chapters of personal bankruptcy offer advantages with similar outcomes. A Chapter 13 bankruptcy is designed to repay creditors over three to five years, with some unsecured debt forgiven at the conclusion of the repayment plan. Typically, the primary reason a debtor files Chapter 13 bankruptcy is to secure and retain property. In contrast, a Chapter 7 bankruptcy wipes the slate clear, but it is possible that some non-exempt property will need to be surrendered.A bankruptcy filing will negatively affect a person's credit score. A Chapter 7 bankruptcy can remain on a debtor's credit report for up to 10 years, while a Chapter 13 bankruptcy will typically remain for 7 years. This is a FAQ for most individuals contemplating bankruptcy. Many individuals will ask their bankruptcy attorney how long it will be before they can obtain credit and even a mortgage. A Chapter 7 bankruptcy is more damaging to a consumer's credit than a Chapter 13 bankruptcy. Consider it from the perspective of a creditor: the last thing they want to see is a debtor walking away from their obligations. Essentially, this is what occurs in Chapter 7. In contrast, a Chapter 13 bankruptcy demonstrates to your creditors that you are willing to negotiate and repay your debts over time. Personal bankruptcy need not ruin your livelihood. Simply because you register for bankruptcy does not preclude you from ever obtaining credit again. There are numerous lenders who are prepared to take the risk if you have a steady job and a sufficient income. Creditors are aware that you cannot file again for eight years, and if you filed Chapter 7, you are likely debt-free. A number of creditors view this as an opportunity. Many of these are predatory, so individuals must exercise caution.The quickest approach to rebuild credit after bankruptcy is to establish a positive payment history as quickly as possible. Some individuals consult their bankruptcy attorney for guidance following bankruptcy. There are also excellent books on money management published by authors such as Dave Ramsey. A person who reads one of these books will be better able to manage their finances. An essential lesson for consumers to learn is how to differentiate between their wants and needs. A secured credit card from a major bank is a good method to establish credit quickly. These cards require a security deposit and allow you to charge that amount. Having a monthly payment and making on-time payments will establish a payment history rapidly. Another loan that is simpler to obtain is an auto loan. Again, the borrower may be required to pay a higher interest rate and a larger down payment, but this will help establish credit history. The most important thing to do after declaring bankruptcy is to change your spending habits and prove to creditors that you deserve a second opportunity.
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