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Admin status: Approved Blogs status: Bankruptcy Published Personal Bankruptcy Published Bankruptcy Pending (11 days remaining) Keywords: declaring personal bankruptcy,negative effects of bankruptcy,how to file for bankruptcy,can bankruptcy stop foreclosure Description: With so many Americans out of work, and so much debt being accumulated over the years, bankruptcy starts to look like the only way to get creditors to stop calling and get out from under a financial burden that can be overwhelming. Post Content:

With so many Americans out of work, and so much debt being accumulated over the years, bankruptcy starts to look like the only way to get creditors to stop calling and get out from under a financial burden that can be overwhelming. But a big question people ask is what are the negative effects of personal bankruptcy? Is it worth it to file bankruptcy if you just continue to have credit problems?

Under current bankruptcy laws, if you are working, you are more likely to file a Chapter 13 bankruptcy, which helps craft a repayment plan for your creditors and does not wipe your credit slate clean. Once you are on the plan, however, the creditors have to accept the terms and can't keep dogging you for payment. But you will have to repay your debts over the course of several years.

For others who are out of work and are facing a difficult job market, a Chapter 7 bankruptcy, where your debts are discharged, coudl be a possibility. Some debts like student loans or tax liens are not dischanged, but unsecured debts can be eliminated.

For secured debts, however, such as cars and homes, you could be forced to sell or return the property to the creditor, depending on your state. Contrary to popular belief, only in some states is your home protected from foreclosure if you file bankruptcy. If you are working through a Chapter 13 repayment plan, you might be able to keep your home if it is clear you can continue to pay your mortgage.

Keep in mind that a bankruptcy will stay on your credit report for ten years, and is worse than simply having delinquent debts. It may take several years of current payments after a bankruptcy in order to be able to qualify for credit once more. In today's difficult economy however, getting credit is nearly impossible anyway. It's best to check with a bankruptcy attorney before declaring person bankruptcy to see whether or not it is right for you.

After Chapter 7 Bankruptcy, What Happens Next?

Well you decided to file bankruptcy under Chapter 7, and a few months and a few meetings and a couple thousand dollars later, your debts are now discharged. What happens next to your credit, and what can you do after Chapter 7 bankruptcy to rebuild your financial life?

The idea behind a Chapter 7 filing is to give you a fresh start. If you were able to file Chapter 7, it's likely that you don't have a regular source of income, since anyone with income may be moved into Chapter 13 to repay some debts within a bankruptcy plan. So, if you now find yourself after Chapter 7 bankruptcy discharge, you probably need to consider how to get some significant, regular income coming in, and figure out how to pay any debts that were not discharged in your bankruptcy.

For example, if you had any student loans, you will still be responsible for those. So, you may want to talk to your loan servicing company to see if you qualify for any kind of hardship forbearance, or other way to pay less on your monthly payments. You want to try to keep these current though. At this point, you may not easily be able to get any other credit due to your filing, and these student loans will help you by giving you something current to appear on your credit report. So don't let these payments get behind!

You may want to start getting credit again, to try and rebuild your credit file. But it will be hard to get lenders to approve you with the bankruptcy on your file, and also if you have no regular income. Getting that regular income is of primary importance right now. Try everything you can think of to get back into a job. And don't jump too quickly into another credit nightmare either. Learn to live within your means by using a monthly budget, and learn to get past the desire to buy whatever you want, based on your old credit card habits. Remember that buying things on credit means you can't really afford it anyway, or you wouldn't need the credit!

After Chapter 7 bankruptcy, you now have a clean slate, and you should make the most of it by fixing your financial resources, getting steady income in place, and working to pay any left over debt on time. Everything else can wait until you are successful in building back your credit by paying on time the debts you still have.

After Bankruptcy, Then What?

Once you file for bankruptcy, you'll have some credit matters to deal with. For some of these issues, you should consider them before filing, if possible. When you have a bankruptcy on your credit report, it will stay there for ten years. Unlike other credit, which drops off after just seven years in most cases, your bankruptcy past will follow you. It also will mean you can have credit trouble even if your credit score rises again. Bankruptcy credit report flags can cause serious credit problems for you.

Just a few years ago, it was relatively easy to get credit cards after bankruptcy, since lenders were willing to take a lot more risk, and poor credit risk customers could be charged much higher fees. After bankruptcy, a debtor's file would usually be wiped clean, so without other debts to pay, a debtor was considered worth at least a risk. That is not true today. Now that the economic crisis has hit mainstream America, with more people losing jobs, or having to deal with lots of debt piled up over the last five to ten years, creditors - banks and other lenders - are afraid to hand out credit the way they did in the past.

The same was true of loans after bankruptcy. While you might have had trouble getting an unsecured personal loan, you might have been able to get a car loan after bankruptcy, since borrowers are less likely to default if they need to have a car, and the lender could always get the car back if the borrower didn't pay. But today, even secured loans re difficult to get approval for after bankruptcy.

When a lender looks at your bankruptcy credit report, it might not be an issue of your credit score being low. Even before you field, it's likely that you were struggling to pay debt on time, and your score was already low. However, if you had paid off the debt, the effort to pay debt back looks better to a lender than walking into bankruptcy court and blowing away debts from multiple lenders at once. Even if several years go by and you're able to rebuild credit after bankruptcy, remember that you score is not the only thing the lender will look at. They will also see the bankruptcy itself, and that will count against you.

If at all possible, you should consider alternatives to bankruptcy before you file. However, once you have filed, you can still rebuild credit after bankruptcy, and even possible qualify for some credit. It can take a few years however, so you need to be patient. Work to repay whatever debt you still have, such as student loans, on time. Don't give up trying to find secured debt, like auto loans, even with bankruptcy on your credit report. Talk to your bank about setting up a small secured loan, where you put $1,000 in a savings account, and get a loan against that deposit, to establish good repayment history.

What Affordable Bankruptcy Options Are Out There?

When you first decide to file for bankruptcy and start calling bankruptcy lawyers, you'll fin out right away that filing for bankruptcy is not cheap. It starts at about $2,000 for legal fees, plus there can be hundreds of dollars in court filing fees. If you're already broke and planning to file bankruptcy, where do you come up with a couple thousand dollars? you do have some bankruptcy options to choose which can help you reduce the cost or avoid it altogether.

To start with, the cost of bankruptcy includes the lawyer fees, court filing costs, and any other extras the lawyer needs to charge, for example copies, or overnight packages to the court. when you first meet with your bankruptcy attorney, make sure you understand what those extra expenses are, and what are fees and what are the court costs.
After seeing that huge expenses, you might be inclined to find out where you can find a cheap bankruptcy option, or even if you can prepare a do it yourself bankruptcy. It's not likely you can find a discount on bankruptcy fees from lawyers, as the process is pretty paperwork intensive, and there is generally a rate that most lawyer will charge. So if someone offers to do it for you cheaply, you should be concerned about whether your paperwork will be done correctly and on time.

As for a do it yourself bankruptcy, it has never really been easy, since there is so much documentation to be done for each case. Lawyers have software programs that they can use to enter all your financial data and spit out the forms. When you are doing it yourself, you will have to type all the forms by hand, and know which form is which. The process also got a little more complicated after the bankruptcy laws changed in 2005. Now, you have other requirements, such as going to credit counseling prior to filing, that you need to be aware of. However, if you feel up to the challenge, there are some books on How to File for Chapter 7 Bankruptcy which will help walk you through the process of filing bankruptcy yourself.
However, there are other bankruptcy options which include not filing at all. Avoiding bankruptcy is the cheapest bankruptcy alternative there is! How do you decide when to file bankruptcy? Bankruptcy can help most when you have so many debts that your total debt is greater than your annual salary. For example, someone making $50,000 per year, who has $60,000 in debt, is going to have trouble paying that back. It's possible though if you get on payment plans with your creditors.

If you are employed, filing bankruptcy today is more likely to require that you file Chapter 13, which allows you to keep some property and pay your debts over three to five years. In other words, it's not a slam dunk that you will get all of your debt wiped clean. This could be a good thing if you are trying to keep your house out of foreclosure, for example. If you are likely to have to file Chapter 13, why not try to work with your creditors to create a debt repayment plan before you spend thousands on a bankruptcy lawyer?

If however you do not have a regular income, a bankruptcy Chapter 7 filing would allow you to discharge, or wipe away, most of your debt. Without income, though, you might also consider just not filing bankruptcy either, unless you have assets you want to try to protect. For example, if you have a car loan, and you file bankruptcy, unless you reaffirm that debt, or agree to pay, you will lose your car in bankruptcy. could you instead work out a revised payment plan with the lender? The same is true for your home; if you do not have the ability to pay the mortgage then either in Chapter 7 or Chapter 13, and can't work to refinance your mortgage, you may be forced to sell your house.

Finally, you want to consider your credit and bankruptcy. If you file bankruptcy, most lenders will consider that a very big red flag for many years to come. It stays on your credit report for 10 years. Unlike just past due accounts, bankruptcy is more serious, and even if your credit score rises, the mere fact that there is a bankruptcy on your record could lead many lenders to just turn you down for credit.

Keep in mind that most bankruptcy lawyers will meet with you in an initial meeting for free or low cost. You should talk with a professional before deciding what to do, and learn if you have any alternatives to bankruptcy that will not cost thousands of dollars.

Get Advice About Bankruptcy Alternatives

If you are considering bankruptcy, you know that it feels like the hardest decision you've probably ever made. There are many questions - whether it will really help you get a fresh financial start, what the credit results are after bankruptcy, how bad it will be for your financial future, whether it's really the right thing to do now. You need a good resource for bankruptcy help.

Finding out more about bankruptcy is the only way to determine for yourself whether it's right for you. Each individual has a different financial picture, and a different set of needs, which will be considerations you need to face when trying to decide about filing bankruptcy. Some of the questions you'll need to answer are, what type of bankruptcy you need to file, what credit problems you are hoping to resolve, what assets you have that you want to save, and what bankruptcy alternatives you have that could help you more than filing. Let's look at some of these one by one.

There are two basic types of consumer bankruptcy, Chapter 7 and Chapter 13. Chapter 7 allows you to discharge, or eliminate, most of your consumer debt. You may have to sell assets, like cars or homes, to pay off secured lenders. But you can possibly walk away in a few months with little or no debt to pay. Chapter 13 is for debtors who have regular income and can pay some of their debt. You set up a repayment plan approved by the bankruptcy court, and in three to five years you are discharged. However, many of your debts can remain, but you may be able to save some of your assets.

The new bankruptcy laws after 2005 require that you complete a "means test" which determines whether you have an ability to pay your debts at least in part. If so, you will have to file Chapter 13 bankruptcy, not Chapter 7. This determination is one you can estimate on your own, without the need of a lawyer.
You will also have to complete credit counseling within 6 months of filing bankruptcy. It might be an option for you to try counseling while you are trying to decide whether to file or not. Sometimes you can find ways to work out your debt problem without having to file for bankruptcy.

Which leads to the credit troubles you are trying to resolve. If you have a lot of unsecured credit card debt, totaling more than you earn in one year, you may be a candidate. It's better to avoid bankruptcy and try to work out deals with your creditors, but that's not always possible. If much of your debt it secured, for example car loans and a home mortgage, you might consider Chapter 13 to hold onto those assets under a repayment plan if possible. If much of your debt is student loans or support payments, however, these cannot be discharged in bankruptcy, so filing would not help you very much. Talk to a professional to sort out what type of credit problems you can deal with most effectively in bankruptcy.

The main bankruptcy alternative you have is not to file at all! Instead, you can try to work out payment plans with your lenders, or sell assets on your own to pay back debts. Another option is to just let your lender repossess for a car loan, or foreclose for a home loan. Yes, these will damage your credit, but some argue that this is not as bad as a bankruptcy filing would be on your credit. which is harder to recover from afterward. If creditors refuse to work with you, and the calls are just too much, then filing might be the only way to go. Once you file with the court, creditors are prohibited from contacting you.

The best steps you can take now are to read more about bankruptcy, learn all you can, and set up a meeting with a credit counselor approved by your local bankruptcy court. You can also find lawyers who will talk to you in an initial meeting for free or for a low cost. Find out all you can before taking the major step of filing for personal bankruptcy.