Life after Bankruptcy

Posted on August 17, 2009 by admin

It has been rightly said that money is not a static entity. Bringing both good and bad times, money has always been an important factor in determining a person’s position and status in the society. While having a good fortune translates into prestige, a bankruptcy is often considered a deathblow to a person’s confidence. Life after bankruptcy is no doubt very difficult, since it requires a huge amount of optimism and courage to start everything afresh again. Bankruptcy is not a dead end, as some people make it in fact it should be just considered as a financial setback, nothing more.

Life after bankruptcy maybe becomes a little harder since getting creditors becomes difficult and even after convincing one, it means borrowing money at a higher interest rate than what others pay. With the sudden downturn in the economy, many companies have filed for bankruptcy, after confronting with there deteriorating financial conditions. Realizing the need of the time, many lending institutions have come up, which offer loans to those who want to rebuild their finances.

It is obvious that once you have filed for bankruptcy, the urgent need is to improve your bank balance. Controlling your finances thus becomes utmost important in your plan. To help you get out of the trauma of your past credit history, you can apply for an unsecured personal loan after bankruptcy. An unsecured loan is preferred because it doesn’t require any collateral or security to the lender. Though convincing a lender to give you an unsecured personal loan is extremely difficult but with little efforts and intelligence, it can be possible.

The other thing that matters a lot, while considering your loan application, is your credit history; the heavier the debts, the lower your chances of getting your application approved . It is thus advisable that you take up a job and work for at least 6-12 months before applying for a loan. This will serve two purposes. One, it will show your optimism to re-establish your credit and secondly, it will increase your credits to match up with the lending company’s set standards, which in turn would mean an easy path to getting a mortgage loan after bankruptcy.

Some things that will help you in rebuilding your credits and regaining control over the situation after bankruptcy are:

  • Maintain a Job:Bankruptcy may bring down your confidence level to an extent you never imagined. But taking up a job becomes the need of the time. Without a good credit score, applying for a loan may mean airing words on a deaf ear. Thus taking up a job is the wisest thing to do in such a situation.
  • Secured Credit Card:A secured credit card lets you borrow only the amount that you have previously transferred to your account.
  • Timely Payment of Bills:Once your finances start growing, you can apply for an unsecured credit card but make sure that you don’t end up spending more than your earnings. By paying all the bills on time, you are in a way improving your credit score, thus proceeding closer to the final loan approval stage.
  •  Credit Report Tracking:You should keep a track of your credit score by checking reports at Equifax, Experian and TransUnion. In case of any discrepancy, you must get it corrected as soon as possible since it affects your loan application validity in a big way.
  • Refinancing of Loans:Refinancing of loans is one of the wise steps you can take, to reduce the financial burden. Refinancing your secured loans like home loans can bring relief to your bank balance.
  • Paying by Cash:Try to pay most bills through cash and not by credit cards. Giving up your credit card for sometime, however convenient it may seem to be is one of the things you should follow.

Thus, proper planning and careful spending can lead you to the level you aim to reach. Though taking a loan is synonymous to falling into a debt trap but it sounds feasible for those who have huge debts to repay. Applying for a personal loan is what people prefer after filing bankruptcy. There is no doubt that you’ll have to face higher personal loan rates after bankruptcy but by remaining patient and diligently working hard you can prove that there is a life after bankruptcy! For those who are on the verge of filing for bankruptcy, should consider debt consolidation loans, which handle all your debts and your role is restricted to paying a single monthly installment, that too at a much lower rate. It is one of the efficient ways to avoid bankruptcy and lead a peaceful and tension free life.

Posted in Basics | Leave a comment

Bankruptcy Basics

Posted on April 21, 2009 by admin

If you are in serious debt, it would be worthwhile for you to know how to file for bankruptcy and how it will affect your credit. Bankruptcy is something everyone has heard of, and has a vague idea about, but little knowledge about how to go about it or its actual effects. The four main types of bankruptcy are Chapter 7, Chapter 11, Chapter 12, and Chapter 13. The names are based on the chapters, or parts, of federal financial laws detailing bankruptcy. The names are based on the chapters, or parts, of federal financial laws detailing bankruptcy.

Individuals will generally file for Chapter 7 or Chapter 13 bankruptcy. Before filing for bankruptcy, make sure there are no other options. Chapter 7 is the most common kind of bankruptcy filing and is often referred to as “personal” bankruptcy. It is generally used by individuals, but some businesses may qualify to file under Chapter 7 as well. Under current United States law, any person filing must receive credit counseling from a person or group approved by the court-appointed bankruptcy trustee to ensure that all other available avenues are reviewed. The law also provides a “means test” to review what capability you may have to repay you debts. If this legal test concludes it is feasible for you to repay, you may be forced to file under Chapter 13, instead of Chapter 7.

Chapter 7 can usually be done without a lawyer’s assistance, though legal assistance is highly recommended. Under Chapter 7, most of your assets are sold to make partial payment on your debts and the rest are written off, with the creditors being prohibited from seek any further repayment. It can stay on a credit report for up to ten years, though seven is typical. This negative impact can be reduced with some sensible financial practices. Making all bill payments on time can be a large help, as most lenders look to the last year or two as an indicator of creditworthiness. A secured credit card, which is credit backed by a bank account, can also be a large help in restoring credit after bankruptcy.  Chapter 13 requires that you follow a court-mandated payment plan to reimburse your creditors for money owed, but does not require the sale of your property and assets.

Chapter 11 is mainly for businesses undergoing restructuring and cut backs. It is a very complicated kind of bankruptcy, involving an intricate reorganization of finances and partial forgiveness of debt. The assistance of a licensed attorney who can help with understanding the types of bankruptcy and their legal complications is absolutely necessary for Chapter 11. Chapter 12 is solely meant for family farmers, and it allows them to address debt with a schedule of repayments.

Not all legal assistance is created equal. You should retain a lawyer who clearly understands how to file for bankruptcy and how it will affect your credit. Just like you would want a specialist physician to perform a major surgery, you should find specialist help that understands the process and ramifications of your decision. Once assistance is retained, refer all of your creditors to your lawyer. After your case is filed, they may not contact your directly, under threat of financial and legal penalties. If you are considering filing for bankruptcy, do not use your existing credit lines or seek to expand them, or else the court may exempt that “system gaming” from the bankruptcy write-offs.  After filing a petition with the court, you will be required to hold a creditors meeting and a trustee will review your assets to determine what is eligible to be sold (Chapter 7) and if you are able to work with a payment plan (Chapter 13). After these steps are finished and the results returned to the court, a decision will be made about what debt should discharge. After that, your creditors have sixty days to challenge the decision regarding any particular account.

Before filing, be sure that you have done solid research or acquired the assistance of an attorney. Knowing how to file for bankruptcy and how it will affect your credit before deciding to file can save you a lot of trouble and confusion.

Posted in Basics | Leave a comment

Credit Cards After Bankruptcy

Posted on April 8, 2009 by admin

For many the thought of rebuilding credit after bankruptcy can seem like a mountain to be climbed. That is not even counting the thought of obtaining credit cards after bankruptcy. For those that desire to rebuild their credit this is the way to go though. And it really is not that hard to obtain a credit card. It may be mush easier than many believe or think.

Finding the best credit card deal after filing bankruptcy is going to take some research but it is not impossible. A consumer needs to take their time and look through what is being offered out there and weigh the odds and do some comparison-shopping.

The first thing a person should know when applying for credit cards after bankruptcy is the difference between secured and unsecured credit cards. There is no doubt that you will get applications for secured credit cards soon after bankruptcy. What a secured credit card is a credit card, which is backed up by a savings loan. The amount you have in the savings account is the amount of the limit on the credit card. This is like insurance on the debt owed. A great example is if you have $100.00 in the account then this is the spending limit on the card. While the money is in the savings account in most cases it is earning interest.

An unsecured credit card is a credit card with no savings account attached to it. Of course it will have a spending limit but will not be backed up by the money in the savings account. In order to obtain this type of card a consumer must fill out a credit card application and then the lender will get the credit report through the credit agency and decide if the applicant is approved and at what interest rate. If you bankruptcy is still fairly new and you have not yet begun to rebuild your credit you may be declined.

When applying for a secured credit card be careful and be sure to do the research as all credit cards are not made equal. A consumer at this point may be getting secured credit card applications in the mail left and right as a lot of banks are pushing these.

For those who are still searching for credit cards after bankruptcy there are some quick tips that will help. When searching for a credit card make a list of certain things or criteria that you will need to have met before applying for the card. One of the criteria may be the interest rate. When searching for the right credit cards after bankruptcy be sure to scout out those low interest rates. One card may have an interest rate of 9.9% while the next card has an interest rate of 23.95%. This is a major difference in rates and it does happen.

Another thing to be aware of is the application fee. Many consumers without even realize it see the great interest fee and then get hit with a huge application fee. Some are as high as $125.00. Not realizing this and getting a bill for this much without spending a penny can send anyone reeling much less the consumer trying to rebuild credit. Once the card is accepted by the consumer it is much harder to cancel and the account and gets the fee to go away. Double-check those fees before accepting the credit card.

When applying for credit cards after bankruptcy be sure the credit card reports to all three credit bureaus or agencies. The agencies are Equifax, TransUnion and Experian. If they do not report to the three companies then do not accept the card. You are trying to rebuild your credit and this is one of the most vital steps in the rebuilding process. It is also important to keep abreast of your credit score and what the credit card agency is reporting.  An easy way to do this is by receiving all 3 in 1 credit reports.  According to creditreport.com you can receive a free report and score.

Another important factor is to remember not to apply for too many cards all at the same time. This will look as if you are not being financially responsible. And you really do not want to get too many cards all at the same time anyway. There is no need for it. And this in turn can hurt your credit score.

Rebuilding your credit using credit cards after bankruptcy is really not hard to accomplish. It will take time and will not happen overnight. Many times it takes a few months to a year. Do your research and double-check the figures and choose wisely.

When you do receive the credit card be very vigilant about the spending and make sure you have the money to pay the bill as soon as it comes in. We all know how easy it is to miss a bill and fall behind. Nobody wants to be on that never ending treadmill and have to start back at square one.

Posted in Methods | Leave a comment