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Is There Life After Bankruptcy?
By
Scott Swinford
Yes, there is
life after bankruptcy, and for many, it is a
well deserved relief from the sleepless
nights and endless calls and letters from
the bill collectors. While some bankruptcies
are caused by reckless spending and adopting
an extravagant lifestyle, most are caused by
unintentional job loss, divorce, illness,
and injury.
Bankruptcy is an uncomfortable subject for a
variety of reasons. The most obvious is the
potential havoc it can wreak on your
finances. Running a close second is the
negative stigma which is often attached to
the process. This negativity is important to
mention because strong emotions can
sometimes lead to unsound financial
decisions with devastating results.
Bankruptcy becomes a viable option for
someone who is "upside down" in terms of
cash flow. In other words, when a person has
more money going out each month than coming
in, bankruptcy should be considered if no
reversal of this negative cash flow is
within sight. The longer someone waits to
explore the various options available, the
more serious his or her situation may
become.
One of the worst things people can do in
this situation is to borrow more money to
try and pay off their debts. On paper, this
is clearly an unwise financial decision. In
the real world, however, it is very common
for individuals to pursue this strategy in
an attempt to buy time and hold off on
filing for bankruptcy. On the surface, this
is certainly a noble notion; however it can
often compound the problem and serves only
to delay the inevitable.
For many homeowners in the midst of this
upside down cash flow, speaking to a
qualified mortgage professional is a much
better option. An experienced loan officer
can objectively look at your finances and
help you determine if restructuring your
mortgage would not only help, but possibly
even alleviate any need for bankruptcy.
If bankruptcy is the only option, seek out a
reputable bankruptcy attorney and credit
counselor. A qualified mortgage specialist
can provide references for you as well, as
he or she works with these professionals on
a regular basis. Reliable references are
essential in this case because experienced
professionals greatly increase the odds of a
successful bankruptcy experience. It's that
simple.
When filing for bankruptcy, be completely
honest and accurate regarding every aspect
of your financial situation. This includes
any changes to your income which may occur
throughout the process. Bankruptcy is a
federal procedure, adjudicated by real
judges, and scrutinized by representatives
who coordinate with the Department of
Justice, the FBI, and the IRS.
Here are some additional steps you can take
to make the bankruptcy process as painless
as possible:
• Save all paperwork regarding your
bankruptcy, and keep it organized. This will
prove beneficial after your bankruptcy as
you now have all of the pertinent
information in one place. Also, be sure to
write down your discharge date. It's
surprising how many people forget to do
this.
• Establish a household budget. This can be
accomplished in many ways, but there are
several inexpensive computer programs
available which do an excellent job.
• Throughout the bankruptcy, do your best to
not only live below your means, but to save
as much cash as possible. You never know
what you may need it for once the process is
completed.
• Be prepared for a barrage of junk mail.
There will be sharks on the loose who are
hoping to capitalize on your need for
credit.
Tips for Rebuilding Credit:
• If you must buy a car, focus on
transportation as opposed to style. Buy an
inexpensive, used car, and try to get a loan
for it. It's a good idea to figure out what
your budget allows in terms of a dollar
amount first. This means obtaining financing
prior to looking for a car.
• Get a secured credit card. Secured credit
cards allow for the cardholder to deposit a
said amount of money into an account, thus
establishing the spending limit of the card.
Missed payments result in deductions from
the account. Some of these cards will reward
responsible borrowers by upping the limit
without an additional deposit. Some will
even convert the account into a traditional
credit card. (Be wary of offers of "easy
credit" or any card which asks you to call a
900 number. You will be charged for the
call.)
• Meet with a credit repair specialist. Not
only can they help you clean up the damage
to your credit report, they can advise you
on specific ways to rebuild the credit you
lost as well. One of their first steps is to
have you send copies of the discharge
document describing what bills you are no
longer responsible for to the credit
reporting agencies.
So YES, there is life after bankruptcy. Use
these tips to help rebuild your credit
slowly and carefully. Make sure that you pay
ALL your bills ON TIME from now on, as late
payments and other negative marks can be
devastating at this point. With a little
time and a clean credit history
post-discharge, you can be back on your feet
better than ever.
Conclusion
Are you one
of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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At these seminars an attorney will personally go over your
mortgage looking for a defense