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Bankruptcy has increased in the last few years to anew level. For example, in 2004, the total Non-business
bankruptcy filings were approximately 1.5 million. The most common reasons for filing bankruptcy is due
to (1) divorce, and (2) medical treatment.
What happens in bankruptcy?
In Bankruptcy, a US federal court declares that the person is unable to pay the debts. The court either
cancels the debts or minimizes them to an extent where one can pay them off in 3-5 years. For some,
bankruptcy is the right choice, while for some it might not be.
What are the effects of filing bankruptcy?
Life after bankruptcy might be difficult. Bankruptcy remains in ones credit history for 10 years, but
the growth of credit scoring and the subprime lending industry means that those who have declared bankruptcy
can get credit cards before their cases have been closed, auto loans within a few months, and reasonably
priced mortgages within two years. One can restore their credit scores to near-prime status within four
years of their filings. Also, lot of employers these days conducts credit checks before an employee is hired.
Bankruptcy sends a wrong signal to these employers about the potential hire. In addition, US court records are
open to public and anyone can read them.
What is the benefit of filing bankruptcy?
Although there is more downside than the upside to bankruptcy, there are few benefits like the phone calls,
notices, and lawsuits would stop. Harassment will be eliminated; there will be less stress and worry.
The creditors will be informed that you are seeking debt relief through the court.
The lawyer will be the contact person for the creditors.
How do you repair your credit after bankruptcy?
Credit repair services help in disputing errors in ones credit reports. They challenge the credit bureaus,
questioning everything in the credit report. Sometime they even dispute the name, address, and social security
number to make the report unrecognizable.
One can also do it themselves by writing to the credit bureaus, dispute inaccuracies and one can even add
a 100-word statement to explain your case. If one is late on his/her payment because of a job loss, serious
illness, divorce, death in family, stolen identity, natural disaster, or any compelling reason than it is
worth while speaking up and writing a 100 word statement in the credit report. Sometimes, the bureau helps
writing the statement if you need help. The merchants and bankers should not think that you are careless
with finances, unless you explain they will not know if you can manage the finances well.
How do you avoid bankruptcy?
By entering into a debt reduction, negotiation, and debt settlement program with an established company like
Debt Free After All
Article Written by Naz
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