Considering Bankruptcy?

The current crises has more and more people considering filling for bankruptcy.

Some might view going bankrupt as a way of solving all their financial problems and putting an end to debt collectors, bills, and nagging creditors. But going bankrupt is not without its problems, and will affect your life for years to come. It can also be hard to swallow your pride and file for bankruptcy.

Going bankrupt has nothing to do with being "rich" or "poor", in fact, most people that file for bankruptcy can be considered "rich".

Steps for filling for bankruptcy

Make sure you consider all other options before filling for bankruptcy. Since a bankruptcy filling stays on your record for up to ten years, it will be very difficult to get any king of a loan during that period.

Before going bankrupt you will also have to submit to credit counseling to make sure that there are no other alternatives.

When filling for bankruptcy you have two options. You can file for a Chapter 7 or Chapter 13 bankruptcy. Most individuals will be forced to file a Chapter 13 bankruptcy that allows for some type of repayment plan to be worked out. A Chapter 7 Bankruptcy filing requires that you sell your available assets in order to repay your debt. Under a Chapter 7 filling you are not required to pay more than what your assets are worth.

When filling for bankruptcy it is recommended that you use a lawyer.

After filling for bankrupcy an "automatic stay" goes into effect. During the "automatic stay" you can not be contacted concerning your debt by your creditors. Creditors that breaks this "automatic stay" can be held liable. You should inform your lawyer if this happens.

The next step is the meeting of creditors. At this meeting you will be required to list all your debts as well as your assets. Most your debt will be eligible to be included in your bankruptcy filling. Some of the exceptions are tax bills and student loans.

Under any circumstance should you try to increase your debt prior to filling for bankruptcy. If creditors can show that you intentionally incurred debt that you knew you would not pay, this amount can be excluded from your bankruptcy filing.

If you filled for Chapter 7, and about two months after the creditors meeting, assuming there wasn´t a lawsuit challenging the discharge of a particular debt, you will receive notice of a discharge of debt. A Chapter 13 filling is slighly different and a notice is only sent out when all the agreed upon payments have been made.

What to do after going bankrupt

A bankruptcy filling will stay on your credit report for up to ten years, but you should start rebuilding you credit as soon as possible. This will pay-off in the long run.

Paying your monthly bills on time is a good way to start. Some companies report these timely payments to the credit agencies. You also shouldn´t apply for too much credit in a short period of time.  And never use up all your credit lines.

The best way to start rebuilding your credit is by paying off any new loans on time. The best place to start is with secured credit cards. Secured credit c ards require

a deposit but are reported to the credit agencies just like regular credit cards. Use your secured credit card and pay off your balance on time each month. You do not need to carry a monthly balance or incure interest charges in order to rebuild your credit.

You should also make sure that the information on your credit report is accurate.  Check that the debt dischared as part of your bankruptcy filling is not being reported as overdue.