Advantages of Bankruptcy

Advantages of Bankruptcy

Folks who are considering filing bankruptcy are faced with a lot of questions and are often not sure what the advantages could be, if any. Besides the obvious advantage of not having that lingering debt that hangs over their heads everyday, are there any other advantages?

There are many different aspects to consider before making a final decision. There are always options, but choosing the right option is not always easy. Below are some of the advantages that can help folks make those decisions that are right for them. The advantages are not always the deciding factor but they can sure help you make a wise decision.

Section 362-The Automatic Stay

One advantage of filing for Chapter 7 or Chapter 13 bankruptcy, is that when the petition is filed it invokes the automatic stay, which requires the creditors by law to cease all activities of collecting the debt. This means that they have to stop calling, leaving messages, or mailing you notices when they are notified of your intentions. They have to stop all garnishments, and in some instances return money that they already seized. Creditors can be penalized by the court system if their efforts continue.

Chapter 7 A "Fresh Start"

Chapter 7 bankruptcy is the better option for debtors who have little or no property, lower income and mostly unsecured debts. But chapter 7 can include both secured and unsecured debts. Unsecured debts are those like medical bills and credit cards. A secured debt is when you have decided to use collateral that can include your home, car, or other major assets you have ownership of. Chapter 7 bankruptcy is also referred to as liquidation.

Possible Disadvantages

Chapter 7 is not a perfect solution because there are some unsecured debts that do not qualify for discharge under Chapter 7 the biggest of which is most school loans. Folks who are eligible for Chapter 7 bankruptcy may be discharged or forgiven from most unsecured debts. With a secured debt the creditor is entitled to collect the debt by seizing and selling certain assets of the debtor if payments are missed. Or you may have the option, if not to financially burdensome, to reaffirm the secured debt and keep that asset.

Chapter 13

Chapter 13 bankruptcy provides a better solution for those folks who have a regular income, secured debts and do not which to loose their property. Chapter 13 bankruptcy allows the debtor to submit a plan, to the bankruptcy court to repay the debts over a three to five year period of time. This means the person does not have to lose ownership of the items used to secure the debt. Each individual’s situation is different though, and must be evaluated before deciding which type of bankruptcy is right for their particular situation.

Pre Filing Credit Counseling and Debtor Education Courses

When someone decides to file for bankruptcy, whether it is Chapter 7 or Chapter 13, they are required to take two courses a pre and post filing course. The consumer is required to take a course pertaining to credit counseling prior to filing the case and debtor education course after filing and before discharge. This is an advantage that not only helps you figure what had went wrong, but it will also help you find new ways of budgeting, paying bills, and spending your funds so that you do not run into the same financial difficulty in the future. The courses also teach you how to protect yourself against identity theft and also how to read and monitor your credit report. Today, most, if not all companies that offer these courses offer them online for quickness and convenience.

Employment After Bankruptcy

Folks that are concerned about being dismissed from a job due to the fact that they are filing bankruptcy should not be worried. Another advantage is that employers are not allowed to dismiss an employee based upon the fact that they, the employee, are filing bankruptcy. Keep in mind, however, that it may affect your ability to obtain new employment for a few years after filing bankruptcy.

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5 Easy Steps to Rebuild Your Credit after Bankruptcy

Bankruptcy often is the last solution for many folks who have unbearable debts. With the filing of bankruptcy, you will get rid of your debt and stop the harassing call of your creditors.

Although avoiding bankruptcy has many undesirable consequences such as your bad credit and payment history will dog you for years to come, but with a little work, and the strategic filing of a bankruptcy case you can improve your credit even before these negative records ruin your credit score. Here are five easy steps you can take to rebuild your credit after you file.

Step 1: Get to Know Your Current Credit Status

The first step to rebuilding your credit is to look at exactly where you stand. Order your three credit reports from the three national credit bureaus: TransUnion, Equifax, and Experian. You can order these reports online, it easy and secure.

Print each report and review it closely. Try to understand the information listed in your credit reports and highlight any negative records or inaccuracies that are damaging your credit score.

Step 2: Check the Expiration Dates

By law, your bankruptcy will remain in your credit report for 7 to 10 years, but the exact expiry date might be different among these 3 reports. Look up the exact date of each of bad records including judgments, liens, charge-offs, late payments, bankruptcy filings, and collection records. You will likely see a major improvement in your credit score when these records expire.

Step 3: Request Corrections On Any Inaccurate Records  

If you find inaccurate records, fraudulent accounts, or records that should have expired on you credit reports, you have the right to send a separate dispute letter to each of the credit bureaus to correct your Equifax, Experian, and TransUnion records. The bureaus will initial a 30 days investigation to see whether your requests are valid and if so, they will correct the inaccuracy in your credit report.

Just one note, don't try to dispute any of the positive information listed in your credit reports and it is a waste of time to attempt to dispute these records. Disputing positive information may actually harm your credit scores.

Step 4: Start to Create Good Credit

Since there is no way to remove your bad record from your credit report, the best way to improve your credit score is to add good credits and building up your credit from there. You can easy do this by open up a new credit card from banks like Orchard Bank (Orchard bank has credit card plan designed specially to help people rebuild their credit after bankruptcy).

Use this new credit card responsibly and make the monthly payment timely; with this you are building new history of good credit behavior on your credit report. Over time, you may want to open additional credit card accounts or obtain a loan to boost your credit score even higher.

Step 5: Monitor Your Progress

Subscribe to a credit card monitoring service or get a credit card monitoring software and use it to track your credit score progress closely. Your credit score should improve steadily as you continue to use credit responsibly and add new positive information to your credit reports.

Summary

Bankruptcy does not need to chain you to bad credit for the next seven to ten years, but you have to be proactive in order to recover and rebuild your credit.

Call Charles L Basch II @ 313-343-9930 TODAY!!