What You Can Do Once You File for Bankruptcy

Filing for bankruptcy is one of the toughest decisions you can ever make in life. In the ongoing tough financial situation, many households and businesses are forced to take this route to regain their financial footing. The Administrative Office of the U.S. Courts says there were 819159 bankruptcy filings in 2016 and while this is a 6.95% drop from the previous year, the number highlights the fact that this is now a financial strategy that many Americans are opting for.

If you are going through a very tough financial situation, you must be looking for a solution that will not totally wipe you out. It might be cliché, but in financial management, information is power. As such, it is important to get more insight on bankruptcy before opting for it. Whether you are a household owner or a business owner, there are many implications of filing for bankruptcy, and you should know what you are getting into.

If you have decided to file for bankruptcy, below are some highlights to guide you through the process:

Bankruptcy Filing in Detail

In the simplest terms, filing for bankruptcy is a federal court process to help you if you can no longer pay your debts. This process helps liquidate your assets to pay off pending debts and creating a repayment plan. It is a strategy aimed at giving you a fresh start. This court process protects both income earners and businesses during the hearings.

The process begins when your lawyer files a petition in a bankruptcy court. It is crucial to use a bankruptcy lawyer who understands the convoluted nature of bankruptcy laws. The two main types of bankruptcy are:

1. Chapter 7 – Otherwise known as liquidation, this applies if you have assets that can be liquidated to repay some or all of your debts. This lasts 3 to 6 months. There are properties that cannot be sold, and this is one reason why you need to hire an attorney to help you through the process.
2. Chapter 13 – This is known as reorganization and applies if you have a stable source of income. The main idea here is to work with the bankruptcy court to create a repayment plan for your debts. There is a limit on secured and unsecured debts, and this will determine whether you qualify or not.

Why File for Bankruptcy?

You must have heard a lot of stories about bankruptcy and truth be told; there are a lot of misconceptions about this process. Whatever you might have heard, there are many reasons to file for bankruptcy. You will gain freedom from all debts within the short period of the bankruptcy process. By filing Chapter 7, you can retain your salary and wages.

You can also go for other lines of credit including a title loan from Bay Area Tile Loans to help you meet cash shortfalls. This process also helps you start rebuilding your credit sooner, and you will also be able to get rid of aggressive debt collectors.

There are many other benefits of filing for bankruptcy as opposed to struggling with debts without any solution in sight. While it might dent your reputation, you will get a clean slate from which to start rebuilding your finances.

Life after Filing Bankruptcy

1. Expect New Challenges

The truth is, after filing for bankruptcy, you will encounter new challenges but remember, all is well that end swell. Financial advisors say that bankruptcy is a safety valve. Expect some new challenges including a blot on your credit rating as bankruptcy will stay there for 10 years. Lenders will consider you a high-risk customer, and when you can borrow, the interest rates will be punitive.

All these are challenges that you can overcome because many others before you have done it successfully and gotten back on their feet. From Walt Disney, Abraham Lincoln, Henry Ford, H.J Heinz to Burt Reynolds, you have many people to look up to because they were here and they went on to become great in different spheres of life.

2. Adopt a Slimmed Down Lifestyle

You must be ready for a no-frills lifestyle. For a Chapter 13 bankruptcy, you have to live within a strict budget for the reorganization to work. You can’t take on new debts because this would be counterproductive. For Chapter 7, you will manage to walk away from previous debt but also at a cost; you will not be able to borrow easily because of the bankruptcy record on your credit report. This will mean learning to live on cash.

3. Create a Budget

Sounds obvious, right? Well, you will be surprised to learn that most people start their poor spending habits immediately they are done with the bankruptcy process. It is no wonder then that many people who have filed for bankruptcy find themselves in financial trouble a few years later.  Budgeting is the most effective financial management strategy yet the most ignored.

Sit down with your family and come up with a budget that is simple but effective. Look at your income and scale down your spending to avoid piling up bills. Everyone in your household has to cooperate when it comes to living within the budget.

4. Start Rebuilding Your Credit

Now that the court process is behind you, it is time to get in the driver’s seat and start rebuilding your credit. This is a tough task that requires proactive action from you. To do this, make sure you pay bills on time to avoid any further damage to your already poor credit profile.

5. Shop Smartly

There are many innovative ways to control your spending including looking for online bargains, coupons, sales and other offers that will help you save money. Remember, the whole idea of filing for bankruptcy is for you get you back on your feet and to get there, you must be proactive.

Well, there is still life after bankruptcy, and if you follow these tips, you will soon be able to access affordable loans. More importantly, this should be a learning process through which you can get an introspective look at your finances, spending habits and also new spending tips from the experts you are dealing with.

If you are going through a bankruptcy process, it is understandable that your financial situation is tough. You can now get a loan to take care of your financial emergency from Bay Area Tile Loans. Call or visit our offices to learn about the loan options available for you.