Procedures after filing a bankruptcy

Filing for bankruptcy is decision that is made after much deliberation and assessment of personal finance and debt obligations. It is not a decision that most people make easily or on a whim. Pressing questions linger for anyone considering bankruptcy including:

  • How long will the bankruptcy stay on my credit record?
  • How will bankruptcy affect the ability to get credit in the future?
  • How will bankruptcy affect the chances of getting a mortgage or buying a car?

Everyone that files for bankruptcy must make a clear list or schedule of all their assets and debts including outstanding loans, liens, credit card debt, a record of investments, bank accounts, business interests, etc. All the information listed on the schedule must be accurate and up to date or the petition may be denied and charges of perjury could be brought against the filler. Certain debts cannot be discharged through bankruptcy such as tax debt or student loans. A qualified and experienced bankruptcy lawyer will supply a detailed list of all the documentation needed to present to the bankruptcy court. A bankruptcy lawyer can also explain the process from beginning to end and guide you in this uncertain and troubling time.

Credit after Bankruptcy

A bankruptcy will stay on a credit record for ten years, though most credit companies only consider the first seven years when granting credit. Depending on the specifics of each case, some credit card companies will negotiate a new contract with the debtor and allow the debtor to keep the credit card or issue a new one under the new agreement. Another option is to apply for a secured credit card. This type of credit card works much like a savings account. The owner of the account agrees to keep a certain amount in a savings account and the issuer or creditor allows a credit line for the amount in the account. This helps to rebuild credit while affording all the conveniences of a credit card. Creditors often try to extend credit to individuals that have settled their bankruptcy case soon after the case is finalized.

However, beware of credit card solicitations. Do not jump at the first offer in the mail. Many initial offers will carry a high interest rate or require a high annual fee for the service. My advice is to holdout for a while and soon more reasonable offers will appear. Any credit card offer after bankruptcy will have a low credit limit but this will help to keep spending in check while the individual rebuilds his/her credit. Any offer of credit should be treated with caution and credit granted should be used sparingly. It is important to make all payments on time, this will help rebuild credit as well.

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