In today’s unfortunate economic circumstances, many people are finding it necessary to declare bankruptcy. If you are one of these people, you might feel hopeless, like there is no hope for your financial future; however, this is not necessarily the case. Although, the road to bankruptcy recovery is not easy or fast, it is possible. The following advice may be beneficial for you as you take steps to get your finances in order after bankruptcy.
After you do file for bankruptcy, make sure to me with your creditors and advise them of the situation. Any non-exempt assets that you have such as cash and certificates of deposits will be required to be returned to the court-appointed trustee for your case. This is only the first of a long part of the process, however, the next part should remain on recovery and what you plan to do to maintain decent financial health in the future.
Given the situation, it will not be surprising if you find it difficult to get access to credit or loans for the next few years, because many lenders are probably skeptical to lend money or give access to credit to someone who has filed for bankruptcy. Usually, those with a bankruptcy on their record will not be able to qualify for a home or a car loan. Sometimes, there are basic loans or credit cards that those who have filed for bankruptcy can have access to; however, the interest rate is typically high.
Many people do feel hopeless because it is difficult to get credit and bankruptcy is hard on a person’s self-esteem, however, making wise decisions after bankruptcy will make all the difference in your situation. The most important thing you can do is to remain positive, especially with the negativity that surrounds bankruptcy. Focus on the future and be positive about it and you will find that your situation will be better than you anticipated.
For those that own cars, you will obviously still need them to get around, therefore talk with your car lender about signing a reaffirmation agreement. This agreement specifies your willingness to continue making payments and to act in good faith, thus allowing you to keep the vehicle. Remember, however, that if you do not act in good faith, your vehicle could be repossessed and sold and you will be liable for any deficiency.
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.
Also, many people think that they should co-sign with others to help their credit during this time period. However, this is not always smart because, if the loan goes bad, you will be held responsible and it will be bad for your credit. Although it may seem like a good way to build your credit, the risk is simply not worth it.
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.
Also, after you have filed for bankruptcy, do not be surprised if people ask you about it. There are a lot of reasons people file for bankruptcy, some crazier than others, and you want to make sure that the people you are talking with understand why you had to file for bankruptcy. Therefore, prepare your story. This does not mean you make one up, rather that you know the details you will share with people to help them understand why you had to file for bankruptcy in the first place.
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.