For some, personal bankruptcy is a concept shrouded in mystery and fear.
However, the fact is that it can be a helpful tool for those who need a fresh financial beginning. The key to approaching bankruptcy in a sensible manner is thorough knowledge of the subject. Apply the tips in this article to your personal circumstances, and you will be able to view bankruptcy in a new, rational light that may pave the way to brighter days for you and your family.
When it soaks in that filing for personal bankruptcy, don’t use all of your retirement funds, or all of your savings to resolve insolvency or pay creditors. Unless there are no other options, your retirement funds should never be touched. Though you may need to use a bit of your savings, try hard to maintain some of your reserves so that you have some degree of flexibility going forward.
Know what debts can be forgiven. You may hear that you have to pay a certain debt, and that it cannot be discharged, but that information will usually be coming from a bill collector. Student loans and child support and a few other debts cannot be discharged, but most others can.
If you have filed for Chapter 13 bankruptcy,
but realize that you are unable to meet your payment obligations, you may be able to convert to a Chapter 7 bankruptcy instead. To qualify for the conversion, you must never have converted your bankruptcy before and also undergo a financial evaluation. The laws surrounding this process are always changing, so be sure to talk with an attorney who can help you navigate this process.
After your bankruptcy has been discharged or finalized, a good way to begin rebuilding your credit is to obtain a pre-paid credit card. This type of card is usually available at your local bank. The card is secured by the amount of money you load onto it. You can not charge more than what you have loaded onto the card, so over-spending shouldn’t be a problem. It works like a regular credit card, with monthly statements and payments. After you have kept this card in good standing for a period of time, you may be able to have it switched into a regular, revolving credit card.
Before you make a final decision to file for bankruptcy, look into all the options that are available to help your financial situation. If you are buried under credit card debt, it can help to check out a debt consolidation, or home-equity loan if you qualify. You can also try negotiating smaller payments on your debt until your finances are better in control. Bankruptcy is always an option, but if you can alleviate your problems in another way, you will be able to avoid a major hit to your credit history.
It is quite common to view personal bankruptcy as something to be avoided at all costs. The truth for many consumers, however, is that it represents the best way to regain control over their financial futures. In order to understand the best way to use a personal bankruptcy filing to your advantage is to acquire a solid knowledge of the topic. Take the ideas in this piece to heart and you will have a better idea of how best to move forward regarding personal financial matters.
