Starting Over: Using Bankruptcy for a Fresh Start

Many times, the stigma attached to filing for bankruptcy deters those who would actually benefit from filing for it. Many people associate bankruptcy with being “broke” or in a state of destitution. In fact, filing for bankruptcy simply means that a person incurred too much debt for their income, and is in search of a way to handle these debts to their creditors without having to give up all of their financial freedom in order to do so. Granted, before entering bankruptcy proceedings and taking the first steps toward filing, one should always educate themselves in both financial and bankruptcy matters. It is also definitely advised they seek legal counsel to avoid a misstep in the process.

What Bankruptcy Accomplishes

A successful bankruptcy filing, no matter the chapter, resolves the debt owed to your creditors. In some cases, like a Chapter 7 filing, you resolve your debts completely but you have to give up some of your non-exempt assets. Bankruptcies such as a Chapter 13 filing resolve debts owed to creditors by allowing the filer to agree to a payment plan on the debt itself. The payment plan usually lasts three to five years and allows the debtor to systematically handle his debt by giving him the necessary time to juggle financial matters or sell assets in order to make their debt payable.

Your Filing Was Successful: Now What?

There are also certain steps you should take in order to heal your own financial status after a successful bankruptcy judgment. These steps will help you to ensure that, though it may take time, you are working toward helping your credit score back to its former state and reestablishing a healthy credit rating. Some of the things you should consider are:

Without faltering, every one of your monthly bills needs to be paid on time, without exception. Any record of late payment on bills after a bankruptcy settlement will hurt your credit rating as much or more than the bankruptcy filing did.
Live within your means. Once you have filed for bankruptcy, you enter a new financial situation. Make sure your spending reflects your income correctly in order to avoid winding up in a similar situation.
Make an attempt to reestablish a line of credit by applying for a credit card within 2 years of filing for bankruptcy. It’s important that you be aggressive in attempting to rebuild a positive standing with your credit status.

Once your bankruptcy has been filed and the matter has been settled, record of the issue will remain on your credit report for up to ten years. This in itself is one of the reasons many people who should file for bankruptcy don’t. It is far more detrimental to your credit rating to continuously allow uncollected debts accumulate on your credit record. These issues will by far surpass the damage done by a bankruptcy filing, because they are issues that remain unresolved.

Getting Help

If you are struggling with debts you can't pay, an experienced bankruptcy attorney can provide you with advice on what type of bankruptcy you might qualify for and on whether bankruptcy is a viable option to help you eliminate or restructure debt and start over. With the help of an attorney, you can file the papers correctly in court and get your financial mess cleaned up quickly and with greater ease.

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