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The School of Hard Knocks: Bankruptcy
By plrprousers | May 25, 2009
Bankruptcy is not an easy way out. We should get that out of the way right up front. It is important to know right from the beginning that bankruptcy isn’t a “get out of jail free” card from the government. Bankruptcy can take away most debts, but it is going to cost you something in return.
Important Bankruptcy Information You Need to Know
The first step should be to gather all of the information you can on bankruptcy. I recommend free organizations like the Bankruptcy Help Desk. If bankruptcy is really the only way out, your next step is not filing but finding a good credit counseling service. Bankruptcy comes only after you’ve gone through all of the plan you received from credit counseling. This is because you need to be viewed as unable to pay your bills. A credit advocate has to say that there is no hope of you paying off your debt, so bankruptcy is the only option.
If you file for bankruptcy, it will stay on your credit report for 10 years. After you’ve filed for bankruptcy, it’s going to be hard to get new credit for quite awhile. Getting new credit can take up to another two whole years. Unfortunately, some people can’t even get that. A bankruptcy on your credit report can actually determine whether or not you get a job. Many employers will request credit reports to see how potential hires handle their money. This is particularly essential if you’re going to be in a profession like accounting.
Your Credit Life After Bankruptcy
When you do get credit after your bankruptcy, you’re going to get hit with high fees and interest rates. This means spending thousands of dollars more than you would with good credit. Many people try waiting out the 10 years until their credit report is clean and the bankruptcy is gone. On top of waiting 10 years, you’re also going to be starting off from square one with a beginners credit score.
Your first step should always be to find and talk to a credit counseling service to see what help they can give you. These can normally stop accruing interest, lower your debt and reduce your payments. That will help you pay off the debt faster without adding more to it. One option you might look into if you aren’t too far into bad credit is liability consolidation. That allows you to lump together all of your unguaranteed debts. Those kinds of debts haven’t been assured by confirmative companies. This lets you consolidate all your debts into one simple payment.
Bankruptcy isn’t easy by any means, but there is a secret: credit companies are willing to work with you. They know that if they work with you, they may get some or most of that debt back. If they don’t help you, they’ll never see a penny of their money again. It’s always in their best interests to keep you out of bankruptcy. To find out more about tricks like this click here for free bankruptcy resources.
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