April 14, 2011

How To Survive Bankruptcy

Posted in Bankruptcy tagged at 2:07 pm by demetriagraves

It’s surprisingly common these days. Debts pile up and then something unexpected happens; an illness, a layoff, a divorce. Next thing you know you’re in financial strife and considering bankruptcy as an option. In earlier days, a debtor had a life of serfdom or prison to look forward to, but nowadays, we’ve learned to be slightly more forgiving. The good news is that filing for bankruptcy is not the end of your financial life. So here’s a look at what to expect when you file for bankruptcy, and how to survive.

Bankruptcy may not solve all your problems. Bankruptcy will not clear away secured debts and it will not free you from spousal support, child support, student loans, taxes or other legally-protected obligations. But it does clear your unsecured debts, which are, generally speaking, your bills – credit card bills, medical bills, phone bills, etc. – plus loans where nothing was put down as collateral.

Don’t liquidate your retirement portfolio to try and pay off bills. Take your time and gather all your documents. Also, avoid depositing money into banks that you have credit card or loan accounts at. They can seize your deposits if an account goes delinquent.

Anyone filing for bankruptcy is required to attend credit counseling, but it is a good idea anyway. You may be lucky enough to find a way around bankruptcy, and you’ll certainly get helpful debt-management tips. For example, you can pay a credit card to zero so it’s not listed as a creditor in your filing and then keep it for after the filing to build up credit at a lower interest rate than you could possibly get after bankruptcy.

Once your bankruptcy has been filed, the calls from collection agencies will stop. This is when you’ll be required to visit a credit counselor and attend a creditors’ meeting. The bankruptcy will be finalized and you will begin with a fresh start under Chapter 7. The bankruptcy will remain on your record for seven to 10 years, making it difficult to get most forms of unsecured loans. It will also result in higher interest rates when you get a secured loan. If you’re like the majority of people who file for bankruptcy, this will be a small price to pay to be finished with the crisis that brought the bankruptcy on.
If you have questions about filing for bankruptcy I offer a free 30 minute telephone bankruptcy consultation where we can discuss your debt situation and you can get your questions answered.


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