Personal Bankruptcy Tips That Can Help Your Credit

Posted at by PConran on category Bankruptcy

In the short term, bankruptcy is a negative experience. Many people feel embarrassed or ashamed if they have to tell other people that they are bankrupt. Don’t give into it and be sure to use this advice to figure out what you need to know to avoid bankruptcy.

The primary catalyst for filing personal bankruptcy is having a large amount of debt that can’t be readily repaid. When you get into this situation yourself, your first step is to familiarize yourself with your local bankruptcy regulations. Each state has their own bankruptcy laws. In certain states if you file for bankruptcy your home remains protected, but the laws vary depending on where you reside. Be sure you educate yourself on local laws prior to filing.

Make sure you’ve exhausted all other options prior to declaring bankruptcy. You have better options. For example, you could try credit counseling. Be certain that bankruptcy is the only option you have before pursuing this course because bankruptcy is always evident on your financial and credit history.

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. You should never touch your retirement accounts, unless you have absolutely no choice. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.

Bankruptcy can be a good time to spend time with people you love. Going through bankruptcy is a lot of stress. It can take a long time, take a great emotional toll and cause people to feel embarrassed and defeated. It is not uncommon for a person to feel the need to pull away from loved ones during the process. However, this isolation will just make you feel worse, and it could cause you to be depressed. Therefore, meet this challenge head on and surround yourself with caring family members so you can get through this difficult financial situation.

Get the word “shame” out of your head when filing for bankruptcy. Feelings of low self-worth, shame and guilt are common for those who have come to the point where bankruptcy is their only option. Try not to give in to these feelings, as they are of no help to you and they can affect your emotional health. Remembering to stay positive as you go through financial difficulties is a great way to deal with your bankruptcy filing.

Do some research about bankruptcy laws before filing for bankruptcy. For instance, for 365 days before filing, no one is able to receive assets from the filer. Also, a person cannot legally increase their debt amount on credit cards prior to filing.

Consider other options prior to filing for personal bankruptcy. You may want to consider credit counseling. Various non-profit companies are out there to give you assistance. These organizations can work with creditors to lower your payments and interest rates. You make payments to them and they pay your creditors.

If you intend to file bankruptcy soon, you may want to discontinue paying all debts. The bankruptcy code stipulates that you cannot make certain payments to creditors or family for specified periods of time before filing. Learn the rules regarding bankruptcy before making any final financial decisions.

Some people don’t know that bankruptcy can actually help your credit more than making late or no payments to your creditors. Though bankruptcies can remain on your credit record for 10 years, it is possible to begin credit repair initiatives immediately. This is why people call bankruptcy a fresh start.

After a few months have passed since your bankruptcy finished, go to the credit reporting agencies and get your credit report. Be sure the report is accurate with your closed credit accounts and discharged loans. Contact the credit reporting agencies if there is a discrepancy in order to rebuild your credit.

As this solid advice demonstrates, there are other options besides bankruptcy. Take the information provided here and avoid filing if at all possible. By using the advice you have learned here, you will find big changes in your life, and you can avoid damage to your credit score.

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