You’re Going Bankrupt – Now What?
No matter how many ways you look at it, you’re simply not bringing in enough money to cover your bills. You’re creditors are calling and harassing you and you have tried everything to prevent it, but unfortunately you’re going bankrupt, now what?
Find a Good Bankruptcy Lawyer
First up, you need to be 100 percent certain that filing for bankruptcy is what you want to do. Bankruptcy should be your last option and only considered when all other efforts have failed. If you are sure about filing for bankruptcy, you will need to find a good bankruptcy lawyer. The decision to file bankruptcy isn’t one to be made lightly – it will likely damage your credit rating for a decade. Finding an experienced attorney is a must. Start by looking for recommendations from family members and friends. And be sure to do your research. Ask for references and follow up with them.
Chapter 7 or Chapter 13
Next you want to decide which chapter you will file. Your lawyer will help you with this, but it is a good idea to research your options. Chapter 7 is where the court orders liquidation of your assets to repay your creditors. The remaining debt is usually discharged. Chapter 7 bankruptcy will appear on your credit report for 10 years. Chapter 13 bankruptcy is basically a court ordered repayment plan. The court will order a trustee to negotiate an acceptable and affordable repayment schedule with all of your creditors. A Chapter 13 bankruptcy will appear on your credit report for 7 years.
Be prepared for your appointment with your lawyer. Have a good idea about which direction you are leaning. You should understand that all of your debts are not dischargeable. You will need to gather proof of your income and all of your debts.
Begin to rebuild your credit. From the moment that you file for bankruptcy, the clock resets for you to rebuild your credit. Depending on which chapter you file, you may have payments due for repayment to your creditors. Begin paying these creditors on time. Your bankruptcy will remain on your credit report for up to 10 years, but by continuing to pay your creditors on time, and fulfilling your obligations will help improve your credit over time. Just because you have filed for bankruptcy does not mean that you won’t be able to get credit during the time it appears on your credit report. Many companies will still offer you credit. It will be much harder to get approval, and your percentage rates will be higher and your limits will be lower.
As you rebuild your financial life after bankruptcy, remember the hard lessons learned. You are only allowed to file for bankruptcy every 7 years. Be diligent with your finances and be careful not to over extend yourself again. If you don’t have the money to buy something, then don’t buy it. Live within your means. Take good care of your credit and your financial health after filing for bankruptcy.
What to Know When You May Be Going Bankrupt
Over 1.5 million people in the United States file for bankruptcy each year. That is a little under 10% of the entire population of the United States. You are going bankrupt, and at this point it is unavoidable. It is nothing to be ashamed or embarrassed about. It is something that you should be prepared for though. Procrastination might have gotten you into this situation, but this is one instance where it will only cause more trouble. Here are some tips that will help you get prepared for bankruptcy.
Accept the Facts
As soon as you accept the simple fact that at this point in time bankruptcy is inevitable, you can start preparing. Most people have a very difficult time coming to grips with this little fact. Don’t bury your head in the sand like an Ostrich, and hope that all of this will magically go away. You have a challenge ahead of you, and you need to rise to the occasion. Bankruptcy is not another problem. It is a solution to most of your problems. It can be a good thing, if it is handled correctly. Accept it, and move on.
Leave the Emotions Out of It
What does scared, sad, embarrassed, ashamed, depressed, defeated, angry, and confused have in common? These are all very common feelings that people have when facing bankruptcy. Take a deep breath and relax. Everything is going to be just fine. One of the hangups that most people face with bankruptcy are emotions. Bankruptcy has become a bad word. It has become associated with bad things, and most people cringe at the idea of going through it. Step aside from your emotions and realize that this is not the end of the world. Bankruptcy is supposed to offer you protection. Don’t let it make you uncomfortable. Don’t let it damage your self-esteem.
Get the Protection That You Need
The whole reason for filing for bankruptcy is protection. You want to be able to protect yourself, your family, or your business from creditors. What kind of protection you get really depends on which chapter of bankruptcy you file. Businesses and individuals both have different needs. Deciding which chapter is best for you is best done with the advice of an attorney.
Even though bankruptcy can protect you from things like credit card debt, and auto loans, there are a few things that bankruptcy will not protect you from. You will still have to pay child support, alimony, taxes and student loans. Some debts will not be protected under a bankruptcy if the creditor can provide the court with a reason why it should not be discharged. There is only one person who can help you at this point.
Hire a Bankruptcy Attorney
Hiring an attorney may seem like an oxymoron. You are in this position because you don’t have enough money to pay off your debts, but a bankruptcy attorney is not only essential, it is crucial to getting your life back on track, and that is exactly what a successful bankruptcy will do. If you wait until the last minute to contact a bankruptcy lawyer, you are only hurting yourself. This is the very first thing that you should do.
A good bankruptcy lawyer will be able to guide you through the confusing road of bankruptcy. Without their advice, you could quickly take a wrong turn that leads you into a dead end alley with all of your creditors blocking your only exit.
Your bankruptcy lawyer is no super hero, but they will be a light at the end of the bankruptcy tunnel. You will have a lot of questions, and this is the only person that will have the answers that will offer you the best solution. Remember, a bankruptcy attorney is a solution to your problem. You could think of them as a foreign language translator, because to you bankruptcy law is a foreign language, but to a qualified bankruptcy attorney, it is their language of choice.
Time to Get Prepared
The first mistake that most people make when they have their first meeting with their bankruptcy lawyer is not being properly prepared. Your attorney will have all of the answers to bankruptcy, but they will have a lot of questions that will help them decide what needs to be done prior to filing. The more ammunition that you have, the quicker your visit with the attorney will be. You are going to be paying by the hour, you want this to be as quick as possible. Here is a checklist that you should have filled out when you go to your first meeting.
• Your name, address, and any contact information. Have your home phone, your work phone, your cell phone, and email ready.
• If you own a business, make sure that you have all of the business information and your relationship to the business on paper.
• Have a detailed list of all of your assets and debts. This goes for your business as well, but keep them both separate.
• Have a detailed list of all of your income sources too.
• You will also need a complete list of all of your creditors. This will help the attorney determine if there may be any possible conflicts of interest. If your attorney already represents any of your creditors, then they will not be able to represent you.
• Bring copies of all of your loan documents.
• Bring proof of payments. This could be bank statements, canceled checks, or receipts.
• If you are going through foreclosure, bring all of your documents associated with it.
• Bring any correspondence from your creditors, and a list of everyone that you may have talked to.
• If anyone signed as a personal guarantee on a loan for you, make sure that you bring their names as well.
• Do not hide anything from your lawyer. If you are accused of bankruptcy fraud, you will lose all of your protection.
Bankruptcy is not the end of the world. It was created to offer you protection. It is the first step to getting your life back on track. It is a solution to a problem. Accept it and get the protection that you need.