In today’s unfortunate economic circumstances, many people are finding it necessary to declare bankruptcy. If you are one of these people, you might feel hopeless, like there is no hope for your financial future; however, this is not necessarily the case. Although, the road to bankruptcy recovery is not easy or fast, it is possible. The following advice may be beneficial for you as you take steps to get your finances in order after bankruptcy.
Once you file for bankruptcy, the first thing to do is contact your creditors because there are certain assets that are non-exempt from bankruptcy including cash and certificates of deposits. These non-exempt assets will be required to be returned to the court-appointed trustee during your case. However, this is just one part of the long bankruptcy process, and there is a long road to recovery in the future.
Given the situation, it will not be surprising if you find it difficult to get access to credit or loans for the next few years, because many lenders are probably skeptical to lend money or give access to credit to someone who has filed for bankruptcy. Usually, those with a bankruptcy on their record will not be able to qualify for a home or a car loan. Sometimes, there are basic loans or credit cards that those who have filed for bankruptcy can have access to; however, the interest rate is typically high.
Sometimes the biggest mistake those suffering from bankruptcy make comes from their negative attitude. A positive attitude can make all the difference in your credit and financial future even though you may not think so. There is truth to the “power of positive thinking” when it comes to bankruptcy, especially when so much about bankruptcy seems negative. Therefore, do your best to remain positive amidst the negative and you will find that you will have a renewed ability to meet the challenges that lie ahead.
Many people who file for bankruptcy still keep their cars, because they need a vehicle to drive around. If you are making payments on the vehicle, make sure that you talk to your car lender and sign a reaffirmation agreement. This agreement specifies your willingness to act in good faith and continue making payments and it allows you to keep your vehicle despite the bankruptcy. Also, continue making payments in full on time to help your credit and to avoid your vehicle being repossessed.
An important part of recovery after bankruptcy is establishing new credit lines, which as mentioned above can be difficult because creditors are often hesitant to give you access to credit. While it is true that most traditional banks will not approve you, some banks will allow you to deposit money into an account and give you a credit card attached to that account, also known as a secured credit card. Although this may not seem like the greatest option, it will help you to eventually be eligible for a regular credit card.
In addition to getting access to new credit, you are also going to want to access your credit reports and make sure they are clean. The credit bureaus – Equifax, Experian, and Trans Union – should show that your debts have been discharged due to bankruptcy. If they do not show this, than you want to make sure that you speak with them about updating the report.
Many people want to build their credit during this rough time and so they consider co-signing with someone. However, experts warn that this is not the smartest idea and that the risk is ultimately not worth the reward. It may seem harmless, however, you never know when the co-signer could default on the loan causing another issue to your credit that you do not want or need.
If you are able to get new credit cards, pay them off in full if possible. Some people assume that they should keep a balance because it is better for their credit; however, it is not always financial smart. You never know what financial emergencies you could have in the future, and therefore, it is a great idea to pay in full so you do not have credit card bills to deal with at the same time as another crisis.
Also, after you have filed for bankruptcy, do not be surprised if people ask you about it. There are a lot of reasons people file for bankruptcy, some crazier than others, and you want to make sure that the people you are talking with understand why you had to file for bankruptcy. Therefore, prepare your story. This does not mean you make one up, rather that you know the details you will share with people to help them understand why you had to file for bankruptcy in the first place.
This will definitely be a difficult time, but it will not last forever, so remain positive. Follow the advice above and you will come out ahead!
A refinance mortgage is the easiest means of restructuring a mortgage loan.