- Personal Finance
Reasons You Can Survive Going Through Bankruptcy
Bankruptcy Does Not Need to Shatter Your Finances
Bankruptcy Happens to Nice People
Perhaps one of the most frightening experiences many people will ever go through is filing for bankruptcy. However, it is reassuring to know you can survive it, and that bankruptcy is something many nice, hard-working people have also experienced. You are not alone!
There are a number of reasons why someone may need to file for bankruptcy. During a recession, many people may lose their jobs or their businesses could fail. Sometimes, they became more and more dependent on their credit cards, and eventually they become unable to keep up with the payments. Even without a recession, one of the most common reasons for people to file bankruptcy is because of high medical bills. Developing a serious illness often creates two problems … you have lots of bills, and you may become unable to work.
Whatever the reason you file for bankruptcy, you need to realize this legal process is designed to give you a fresh start. It does not make you a bad person. Most people feel tremendous relief once they have freed themselves of this burden of debt.
Do Not Waste Your Energy Blaming Others or Feeling Angry
Many people respond to their financial problems by feeling angry and resentful. They often want to blame their spouse, former employer or someone else for creating this predicament. Don’t let yourself get all worked up. It only makes things worse. In fact, if you blame your spouse, you may end up going through divorce and getting in even worse financial shape. Instead, you need to accept the situation and work towards finding ways to resolve it.
Bankruptcy is not the end of the world. Many famous people have gone through it ... even billionaire and U.S. President Donald Trump. In fact, his businesses have gone bankrupt several times. Bankruptcy is actually the opportunity to get a fresh financial start. Once it is over, many people have a deep sense of relief.
Bankruptcy Will Not Ruin Your Life
A bankruptcy will show up on your credit reports for 7 to 10 years. This absolutely terrifies many people, because they believe it means they will not be able to get a credit card or a car loan for that long. This is not true. There are many loan programs available for people who have been through bankruptcy, and you will probably begin getting credit card offers again within a year. Although your first credit cards may need to be secured cards, or will have a lower limit and higher interest rate than you may be accustomed to, there are credit cards available to you. Meanwhile, you can always use a debit card or pay cash for the majority of your purchases.
First Decide If You Qualify to File for Bankruptcy
Bankruptcy laws are very complicated and there are a lot of restriction concerning the amount of debt you have, the type of debt, and your debt to asset ratio, etc. For example, you cannot discharge student loans in a bankruptcy. There are also issues about what property you can keep, such as your home, car and retirement accounts. Make sure you are fully informed so that you know what to expect when you go see the attorney.
Members of our family who have gone through bankruptcy have found this book very helpful, even when they used an attorney. It helped them understand the process and know what to expect.
You Can Use Your Debit Card Until You Get a Credit Card
I honestly do not know how people managed to get through bankruptcy before they were able to use debit cards. However, debit cards with Master Card logos can be used almost like a secured credit card. You can use them to make hotel reservations, rent cars, and make purchases, as long as you have the cash in the bank. In fact, because many debit cards look like credit cards, your business associates will not even notice that you are now paying cash for everything.
You do not have to go around broadcasting the fact that you are going through bankruptcy. Only certain people will need this information. Everyone else will assume your financial situation is the same as always.
Use a Bankruptcy Attorney
Although you may be able to file for bankruptcy without an attorney, you will be far better off by using one. They will make sure that you get all the debt dismissed that you possibly can, and will help you understand how to go through the process as comfortably as possible. If you can manage it, you may want to continue making payments on certain assets that you may want to keep, such as a car or home, and the attorney will help make sure you handle that correctly.
Rebuild Your Credit after Bankruptcy
Once you have gone through the bankruptcy, you will want to work hard to rebuild your credit. You are now free of the overwhelming debt that has been crushing you. The first thing you will need to do is to look at your income, and come up with a budget that will allow you to meet all your current obligations while spending a little LESS than your current income.
The next step to rebuilding your credit is to make your payments for rent, utilities, your car and your new credit cards on time. If you make these payments late, it will take you a long time, if ever, before you will rebuild your credit!
Once you have made your credit card payment on time for a year or so, call the credit card company and ask them to lower your interest rate. If you have been using a secured card, ask them when you can get your original deposit back. Many companies will even pay you interest on the money you deposited with them.
This is a chance to get a fresh start in life. Order copies of your credit reports once in a while to make sure your credit rating is improving, and to be sure they reflect the fact that you are now making your payments on time. If you aren’t sure how to do that, you’ll find complete instructions in “How to Get a Free Credit Report.”
Good luck, take a deep breath, and realize that you are still the same, nice person you were before the bankruptcy. The only difference is that now you are free of debt, and a little wiser!
After You Have Filed Bankruptcy, You Will Need to Re-establish Your Credit
Even after a bankruptcy, it is still possible to get credit. You may have to start with a pre-paid credit card, or use your debit card for a while. However, gradually you will be able to start over. This book is a step-by-step guide to help you along the way, and our family members have found it quite useful.