Bankruptcy Myths and Facts...
Many of the fears and second thoughts regarding bankruptcy are actually myths. Most people believe that they understand the process and consequences of bankruptcy even though they have never been through the process. These myths can actually hurt people, because people will continue to live with unmanageable debt rather than discharging it once and for all. If you want to make an informed decision based on fact, consider the following myths and truths about bankruptcy.
MYTH: People who file bankruptcy can never get a credit card or loan.
This is one of the most incorrect and most dangerous assumptions about filing bankruptcy. First, a bankruptcy will only stay on your record for seven to ten years. While this may seem like a long time, it would likely take you much longer to pay off the debt that will be discharged. Second, many credit cards and banks offer "second chance" loans, cards, and accounts. If you handle these second chances responsibly, you can begin rebuilding your credit record immediately. It is very possible to have a better credit record 3 years after bankruptcy than you did in the months before it.
MYTH: Creditors can come after you for debts even after bankruptcy.
Once a debt has been discharged, it legally does not exist. Creditors cannot harass you or even mention your former debts to them. Some types of debt, like child support and student loans, are not eligible for discharge. Your bankruptcy lawyer can explain which debts will be discharged and which will not. T=If a debt is discharged, the creditor knows that they cannot contact you about the debt without risking charges of harassment.
MYTH: Bankruptcy is difficult, time-consuming, and expensive.
Bankruptcy can be difficult but it is far less difficult than living under the shadow of unpayable debts. In addition, it is not always a long process. Chapter 7 bankruptcies can occur in a matter of months. Chapter 11 and 13 bankruptcies take longer, but this is because these types of bankruptcy are not complete until the new and lower debts have been paid in full. While bankruptcy will definitely cost some money, it generally costs less than paying the debts. Most people who file bankruptcy are in a very poor financial decision, so the costs are not unreasonable.
Bankruptcy is the not the perfect solution for everyone. However, you deserve to make a decision based on accurate factual information rather than myths. If you have any other beliefs about bankruptcy that are holding you back from filing, talk to a bankruptcy attorney today. Bankruptcy is not an end, but rather a bright beginning.
Rebuilding Credit After Bankruptcy: A Step By Step Plan
It is common for people filing bankruptcy in Orlando FL and around the USA to be worried about their credit record. Once you have discharged much of your debt, you probably want to begin learning good economic habits and building your credit score. There are a few things that you can do to build up your credit after a bankruptcy and an expert bankruptcy lawyer can help get you on the right path. Simply follow this step by step plan.
1. Get a Credit Card
Many people who file bankruptcy, especially those who are forced to do so because of credit card debt, are reluctant to get a credit card. However, doing so is the first step to pulling your credit record back up out of the depths. Most people cannot get a normal credit card immediately after a bankruptcy. However, you can probably get a secured card or a store credit card. Use these wisely and pay them off every month. The way you handle credit is over a third of your credit score!
2. Learn to Manage Money Correctly
Most people do not mean to end up bankrupt, but rather end up so because they were never taught how to handle finances. This is an essential skill that should be taught but isn't. When you are considering or have gone through a bankruptcy, you should take the opportunity to read a few books or websites on money management and make a plan for how you will handle your money in the future.
3. After a Reasonable Time, Request That Credit Bureaus Remove It
You may have heard that bankruptcies are reported on your credit record for ten years. However, that is the legal maximum. The federal Fair Credit Reporting Act states that credit agencies cannot report a bankruptcy for more than ten years; there is no minimum limit, and you have nothing to lose by asking for it to be removed sooner.
How soon can you ask to have a bankruptcy removed? This depends on the type of bankruptcy you filed. In a Chapter 13 bankruptcy, where all debts are repaid, credit bureaus automatically remove a bankruptcy after seven years. You may to request that they remove other types of bankruptcy after seven years, but most are happy to do so.
4. Maintain a Solid Debt to Income Ratio
If you have a favorable debt to income ratio, many companies (such as auto manufacturers) will be happy to take a chance and give you a loan. Because you are likely coming out of bankruptcy with zero debt and a very low credit score, it should be easy to keep your debt low. Increases in your income also can help make you look like a good credit risk. Regardless of how much credit you are offered, only take on what you can easily pay off, so you can keep that debt to income ratio high.
Many people believe that you simply cannot get credit after a bankruptcy. While it may be difficult to begin rebuilding your credit score, it is definitely not impossible. By following these steps, you will soon see your scores begin a steady uphill climb.
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