A Bankruptcy Lawyer’s Blog

Bankruptcy is the hottest topic for you as an individual, for the state you live in and for the entire nation. We, as a country, have fallen prey to the government and its failure to protect us. For the last 3 years the number of bankruptcy filings has increased substantially. So, now you've filed your bankruptcy. What should you do to improve your finances? It's time to get back up and start over. There is a way for you to start all over after bankruptcy.

But first, just so you know you're not alone, in the past twelve months there were almost one million bankruptcies filed. Bankruptcy has become an epidemic. Now it's time for you to make a fresh start.

First thing you should do is review your spending habits. Since most people spend more than they earn, their debt problem will be a never-ending cycle. After filing a Chapter 7, you will not be able to file again for 8 years. That's why this article is important. You never want to go through bankruptcy again. So, the method I use when shopping is: is this a luxury or a necessity. Will I die if I don't buy it? No, because usually the answer is that it's a luxury. So I put it back on the shelf. If you want to start over after bankruptcy, live within your means.

Next you should review your recurring bills, add them up and make sure that money is available every month. You'll be rewarded for paying your mortgage/rent and utility bills on time. That's because every time you move, get a new apartment and sign up for utilities, you won't be black-listed for having bad credit. You won't have to make a deposit to have your utilities established.

Try living with cash. All of your credit cards should be gone by now. Don't start any new ones until you have a substantial savings account. The saying is very true; always have a 3-6 month emergency fund. This is especially true in today's world. There's a lot less stress when you have something to fall back on. Make a plan to start over after bankruptcy.

Learn from your bankruptcy. Most people don't realize that their old debt doesn't just disappear. It has to be absorbed by people who do pay their bills. By learning how to start over after bankruptcy you could learn a new way of financial living. Put the past behind you and start living within your means.

Hello, my name is April. I've worked as a Bankruptcy Paralegal for several years and want to teach you methods to start over after bankruptcy. This is the beginning to a new financial start. If you would like more information on a fresh beginning please check out my website at http://savemoneysavetimenow.com/bankruptcy

The bankruptcy abuse and protection act was passed in April of 2005 with the initial goal of making it harder for consumers to get released from their debt under Chapter 7 and making people qualify under Chapter 13. With the intent of the 2005 act to make it harder for consumers to file bankruptcy, the actual result has not been much different. Many consumers are still able to qualify under Chapter 7 - close to 85%, because they can pass the "means test". A "means test" was created to screen consumers for their income levels and a large percentage of people have been able to pass this test and continue on to file bankruptcy under Chapter 7.

The means test is based on the gross income of the filer over the last 6 months prior to filing. The consumer's income is compared to the median income of people in their same state. If the consumer's income is below the median income they automatically qualify for a Chapter 7 filing. If the consumer has income above the median income they next need to calculate their disposable monthly income (DMI) to see if they can qualify for a Chapter 13 filing. If the consumer's DMI is less than $100 a month the consumer can file for Chapter 7, otherwise they need to file for Chapter 13.

The outcome of this act is that consumers must undergo mandatory credit counseling and education. They must also incur additional filing fee, attorney costs and are subject to fewer automatic protections. Small businesses have higher compliance costs and if you get categorized as Chapter 13 you will find yourself with an increased amount of debt repayment (compared to before the law was enacted).

All of our bankruptcy articles are originals, if you liked this or are looking for a Local Bankruptcy Attorney for similar information.

If you are reading this you probably are thinking of filing Bankruptcy or are already in the process. The whole point of Bankruptcy is finding relief from the crushing debt load you are currently carrying.

There are ways to Rebuild Your Credit after Bankruptcy. Think of it as getting back on the horse.

Getting back into the credit arena after Bankruptcy might be an idea you don't even want to think about, but you can learn how to use debt as a financial tool and rebuild your credit easily.

Rebuilding Your Credit

Your credit report is a file of information that a third party gathers and then is sold to others.

When your debts are discharged at the end of your Bankruptcy process, they will end up on your credit report as 'charge-offs'. Most likely it will be noted they were charged off in bankruptcy.

This will cause your credit score to be low...very low.

There may be certain debts that survive Bankruptcy such as a Mortgage, car loan, student loan or any debt you are current on and did not include in your Bankruptcy.

Those debts can create an opportunity for you to rebuild your credit. As long as you keep these debts current, pay them on time each month, that information will be reported to the credit bureaus.

As the months pass, this will begin to reflect positive and your credit score will start to improve.

For any accounts that were closed due to the Bankruptcy, you will have to wait seven years. They will 'fall off' your credit report.

No Debt After Bankruptcy? Rebuilding Your Credit With No Debt

There are a few options to rebuilding your credit after bankruptcy even if you are left with no debt.

Ask someone to co-sign a loan for you. Make sure you are able to repay the loan and NEVER miss a payment or default on this loan. If you mess up, you will not only hurt yourself in this process, but the person who was kind enough to help you out and co-sign the loan.

Another option is obtaining a secured credit card. This is a credit card that is guaranteed by a savings account. You would deposit an amount say $200 into a savings account and receive a credit card with a credit line of $200.00.

If you decide on this option, please be careful and shop for the best deal. There can be fees and costs associated with a secured credit card.

There are also companies out there that will offer a credit card that is NOT secured, but carry a higher interest rate. This can be considered if you keep a low credit limit and pay off the balance each month. This will establish your credit in no time. Just be careful when that company raises your credit limit because they feel you are showing responsibility.

You may also want to consider going back to your bank or credit union, even if you discharged debt you owed them in your Bankruptcy. They know that sometimes Bankruptcy is caused by circumstances beyond your control. Don't let your pride cloud your judgement.

Your bank or credit union wants to help you get back on your feet. They will discuss how they can help you rebuild your credit, savings and retirement accounts.

Debt As A Tool

The last thing you may want to think about is taking on more debt, but there is good debt and bad debt.

What is Good Debt?

There are people who are fortunate enough to be able to purchase a home without taking on a mortgage, students financing at least a portion of their education and auto loans. Those are examples of good debt.

What Is Bad Debt?

Typically it is considered bad debt if you are purchasing goods or services on a credit card that you will use today,but not pay for them within a year.

An example would be buying dinner today and still be paying for it a year from now. However, that same credit card can be used to purchase a computer for the family and self-finance it. That would be considered 'good debt'

Credit cards are highly convenient and in today's society it is almost a requirement. You can't rent a car, buy an airline ticket and so on without a credit card.

The trick here is knowing if you can afford a good or service. If you can afford the items, then purchasing items on a credit card is not such a bad idea, but it becomes a problem if you don't pay off the card within a reasonable amount of time. When you start carrying a balance month to month, you can get into trouble.

Learning to use a credit card as an effective tool after Bankruptcy is important.

If you are thinking you will never touch a credit card again, you may want to reconsider. If you fail to use credit again, you can end up with NO credit history.

Or, when your negative credit information falls off your reports, you do need something to replace it. Many jobs these days require credit history and insurance companies also look into your credit report.

You want to maintain a good credit report and history.

BEWARE of Predatory Lending ~What is Predatory Lending?

The term predatory lending first evolved from unethical mortgage lending practices, but now has expanded to include pay day lenders, who charge outrageous interest rates for one week loans.

After filing Bankruptcy, you may be swamped with offers for new credit. Why? because you are unable to file Bankruptcy again for a specific period of time. You will then be locked into paying back the debt one way or another. Plus they can charge you high interest rates because you will be considered a 'high risk' customer. They feel they are doing YOU a favor by extending credit to you.

There are companies that actually search through public records seeking people who have filed Bankruptcy and then sell your information to credit card companies. Some companies see your hardship as an opportunity.

Be very careful when looking at these offers and know that you do not have to sign for the first offer you receive. Make sure you read ALL the terms associated with any offer. Make sure you are getting the best deal.

Tips To Remember

Even though you may not want to think about rebuilding your credit or obtaining new debt at this time, it is important to understand.

1. Pay the obligations that survive your Bankruptcy on time This WILL rebuild your credit

2. Debt is not a bad thing, it's how you use debt that matters

3. Be aware and cautious with lenders willing to extend credit to you. Shop around, get the best interest rates and low fees

4. Don't be afraid to go back to your bank or credit union.

Resources To Consider

http://www.acassociatesusa.com - AC Associates has helped individuals across the United States reach their financial goals. View More here: http://www.squidoo.com/rebuildingcredit

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