Thinking Of Going Bankrupt?

The current crises has more and more people considering filling for bankruptcy.

To some, filling for bankruptcy can be seen as way of solving financial problems like putting an end to debt collectors, bills, and nagging creditors. However, a bankruptcy filling brings its own problems and will affect your ability to get credit for many years.

Going bankrupt is something that can happen to anyone, be you rich or poor.  It is actually a fact that most bankruptcy filling are by rich people.

Steps for filling for bankruptcy

Before you file for bankruptcy, make sure that you have exhausted all other possible solutions. Since a bankruptcy filling stays on your record for up to ten years, it will be very difficult to get any king of a loan during that period.

You will be required to submit to credit counseling to take sure that you have no other options before being able to go bankrupt.

There are two types of bankruptcies one can file. A Chapter 7 bankruptcy and a Chapter 13. Most individuals are required to file a Chapter 13 bankruptcy which entails some form of repayment plan. Under a Chapter 7 Bankruptcy filing your will sell your assets and use the money to repay your debt. Under a Chapter 7 filling you are not required to pay more than what your assets are worth.

Since filling for bankruptcy is very complicated, it is recommended that you consult an attorney. Filling for bankruptcy is also expensive. Costs can range anywhere from $1200 to over $2000.

One of the benefits of bankrupcy is that an “automatic stay” takes effect. During the “automatic stay” you can not be contacted concerning your debt by your creditors. Creditors can be held responsible if they contact you during this period. You should report any violations of creditors trying to contact you during this period.

Your next step will be to meet with your creditors. At this point you should list all of your assets and your debts. Most your debt will be eligible to be included in your bankruptcy filling. Some of the exceptions are tax bills and student loans.

Under any circumstance should you try to increase your debt prior to filling for bankruptcy. Creditors can exclude from the bankruptcy filling any debt that they can show to have been taken out intentionally.

If you filled for Chapter 7, and about two months after the creditors meeting, assuming there wasn´t a lawsuit challenging the discharge of a particular debt, you will receive notice of a discharge of debt. A Chapter 13 filling is slighly different and a notice is only sent out when all the agreed upon payments have been made.

What to do after going bankrupt

Although a bankruptcy filling will stay on your record for up to ten years, you should start working on improving your credit report shortly after going bankrupt. In so doing you will be helping yourself in the long run.

This includes paying your monthly bills off on time every month. The timely payments will show up in your credit report. Also, don´t apply for too much credit at a time, and don´t use a large portion of any available credit you have.

To rebuild your credit rating you must start by getting credit and paying it off on time. The best place to start is with secured credit cards. These cards give you a credit line equal to the amount you deposit and will report your monthly payments to the credit agencies. Use them every month, and pay off your balance in full and on time! Contrary to what is sometimes said, you don´t need to carry a monthly balance or pay interest to improve your credit score.

Finally, check your credit report regularly and make sure that the information is accurate.  Confirm that the debt discharge is not showing up as overdue. Sometimes this can happen.

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