Filed For Bankruptcy? There Is Still Hope!
Posted August 18, 2009 – 5:13 am in: MortgagesBankruptcy is the unfortunate situation that more and more people are finding themselves in today because of the terrible economic conditions. You might be one of those people, and if you are, chances are you feel hopeless. However, this does not have to be the case; because, although the road to recovery from bankruptcy may not be easy or simple, it is in fact doable. Consider the following advice for those who are about to file for bankruptcy or those who are suffering because of a recent bankruptcy filing - it may be helpful.
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.
Do not be surprised if you find it tough to get a loan for the next few years, because most lenders out there are most likely skeptical about lending to someone who has recently filed for bankruptcy. Most people with a bankruptcy on their record will not be able to qualify for a home or car loan. However, if they do manage to qualify for a basic loan or a credit card, typically the interest rate will be extremely high.
Although, it may seem hopeless, what you do after bankruptcy can make the difference in your credit and your financial future; so, try your best to remain positive. A positive attitude will go a long way in a bankruptcy situation, even though you may not think so. There is so much truth to the theory, “the power of positive thinking,” so apply the theory to your situation and use it to your advantage.
If you own a car and are still making payments, consult with your lending about signing a reaffirmation agreement. This agreement states that you want to continue making your continue making car payments and, therefore, keep the vehicle. Keep in mind, however, if you do not make your payments, your car will be repossessed and sold - you will be liable for any deficiency. Yet, with you sign the agreement, it acts as good faith and gives you more flexibility when working with your lender.
One of the most important parts of recovery after bankruptcy will be establishing new lines of credit, which will be difficult given the bankruptcy on your record. Most likely traditional banks will not approve you, however there is a chance that they will allow you to deposit money into an account and give you a credit card attached to that card, also known as a secured credit card. This may not seem like the best option given that you recently filed for bankruptcy and money is tight, however, it is necessary to establish some sort of credit.
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.
While you are seeking to re-establish your credit, it is important to resist co-signing for anyone. Although co-signing may seem harmless, if the loan goes bad, it will be on your record for awhile and their will be a judgment against you, especially because of the bankruptcy on your record. When it comes down to it, the risk is simply not worth it, even if you think it will help you build your credit.
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.
This will definitely be a difficult time, but it will not last forever, so remain positive. Follow the advice above and you will come out ahead!
