Credit Cards After Bankruptcy – Nothing To Fear
In these difficult economic times, many people have been unable to cope financially and have gone through all the emotional pain and heartache that is bankruptcy. Having come out the other side they are thinking about how to build their credit rating, and also whether or not credit cards after bankruptcy are a good idea.
Credit cards see to some to offer “free money”, or at least a supply of funds that don’t have to be repaid, and as such can be one of the prime reasons for insolvency.
As credit builds up even the minimum payments become impossible, and as the balance increases, exactly the opposite happens to the individual’s credit rating.
Credit cards after bankruptcy are often shunned by individuals who do not want to risk getting back into debt, which is entirely understandable – but is it really a good idea?
Contrary to what many may think, a credit card can be key to restoring your credit record.
Avoiding debt is not the answer. Sure, it’s sensible, vital in fact, not to get into debt that you cannot repay, but demonstrating you can repay some debt is key to restoring your financial record.
Perhaps surprisingly, it is possible to obtain credit cards after bankruptcy if you are prepared to do some legwork. It will be at a much higher interest rate though.
Before going any further, a word of warning. Stay away from unscrupulous card issuers. They will charge an exhorbitant rate of interest, but may not register your card. By law, any card should be registered with the credit authorities – if it isn’t you won’t see any benefit to your credit score, as no one will know about it!
The best thing to do is to take out a secured credit card. This is where you deposit a sum of money, say $500, and the company will give you credit up to that $500. The card is “secure” as you are using funds that you have deposited with them.
What’s the point – why not just spend the money?
Remember, this is about restoring your credit score – not about using a credit card. A secured card simply means that you’re spending money through a card rather than just using cash. The point is, spending cash doesn’t improve your credit rating, spending money via a credit card and repaying it, does.
If you choose to live using cash only, that’s fine and you’ll stay out of debt – but your rating will stay poor. A secured credit card gives you security and an improved credit rating.
This is just one aspect of increasing your credit rating. credit cards after bankruptcy are one weapon in the arsenal of credit repair. For more free information concerning this and bankruptcy in general visit www.howtoclaimbankruptcy.net Get a totally unique version of this article from our article submission service
How To Claim Bankruptcy – Consider This
These days many people are becoming interested in finding out how to claim bankruptcy, which is a situation that arises when individuals can no longer service or repay their debts.
It is not always the individual themself who files for bankruptcy. In some situations a creditor can file what is called a bankruptcy order against the individual who owes money. This will proceed whether the individual likes it or not.
Claiming bankruptcy should only be entered into as a last resort, and all avenues should be explored before taking this final step.
So what are the pros and cons of Bankruptcy?
Probably the most attractive advantage of filing bankruptcy is the fact that, under chapter 7, an individual emerges debt free. True, some debt cannot legally be written off, such as alimony or government tax to name two, but the majority of debt is removed, allowing a fresh start.
There are two downsides to this however.
The first and most difficult is the fact that virtually all your worldly goods are sold and the money disbursed amongst your creditors, leaving you with very little.
The other downside is that those who have had financial dealings with you in the past, if, after selling all your possessions are still out of pocket, are unlikely to want to have any financial dealings with you in future.
It doesn’t have to be this way however if you qualify for chapter 13 bankruptcy.
Since the introduction in 2005 of the Bankruptcy Abuse Prevention and Consumer Protection Act, all bankruptcy applicants are subject to a financial means test.
There is also an examination of your income over the past 6 months, and if it is found to be above the median income for a family of the same size as yours in the same state, and you fail the means test, you are in elligible for chapter 7 bankruptcy. In this case one would normally file chapter 13 bankruptcy.
The advantages of the chapter 13 bankruptcy rules are that you do not have to sell any of your personal assets, and that your creditors are paid in full by way of a repayment plan, over 3 – 5 years.
The means test used to define an individuals allowances and income is complex and quite harsh. The means test can also make your income look better than it is, resulting in a repayment plan that leaves an individual with very little disposable income.
After bankruptcy, rebuilding one’s credit score is vital. Your credit record will retain details of a chapter 7 bankruptcy for a period of 10 years and a chapter 13 for 7 years.
Should you require additional free inShould you requiremation on how to claim bankruptcy and the different chapters and how they work, go to www.howtoclaimbankruptcy.net Get a totally unique version of this article from our article submission service
Declaring Yourself Bankrupt – How to Go About it
With the passing of the boom years and the entry into more recessive times, many people are finding life financially impossible – crushed by the weight of debt taken on in the good years. No amount of loyalty to any financial institution has value any more – they simply want their money. By declaring yourself bankrupt you can wipe away your debts and rebuild your financial position.
It is vital however, that you treat bankruptcy as an absolute last resort and examine every possible means of avoiding it. Indeed, under the Bankruptcy Abuse Prevention and Consumer Protection Act 2005, any individual must undergo proper consumer credit counselling before 180 days have passed since filing.
These are the steps to be taken if it is found that having gone through all the options bankruptcy is the only viable way forward.
The first thing to do is to determine the relevant chapter to file under. The two main chapters are 7 and 13. Chapter 7 results in the selling of your goods, after which you have no further liability for any debt and is therefore often the most favoured option. Chapter 13 is a 3 – 5 year repayment plan. Which type you file under is often determined by the means test applied under the BAPCPA rules.
The second thing to consider is legal representation. Ironically, declaring yourself bankrupt is not an area where you want to save money. Lawyers are not cheap, but it is highly recommended that you hire one, and make sure they are aware of the laws in your state.
Thirdly, your application for bankruptcy can be quashed if you use your credit cards after filing for bankruptcy, due to the fact that you are running up credit that by definition (bankruptcy) you know you can’t repay.
“Automatic stay” is triggered when your lawyer files your bankruptcy case. Creditors then have to approach your lawyer direct regarding any debt, thus taking the pressure off yourself.
In order to check that you are being truthful regarding your financial position, you will be required to attend a meeting of creditors shortly after filing for bankruptcy. At this meeting you will be questioned under oath, so that both the court and creditors can be satisfied as to the veracity of your claimed financial situation.
The trustee then arranges liquidation of your assets with the proceeds used to pay off as much debt as possible. Once this has been done you are no longer liable for any debt left over. Approximately 60 days later you will receive notice of discharge. This is the case for a chapter 7 bankruptcy.
Chapter 13 works differently to 7 in that no assets are sold. A repayment plan is drawn up, the terms of which are determined by means test and can be harsh, to repay all your creditors over a 3 – 5 year period. The bankruptcy is discharged when the repayment plan is complete and 30 – 60 days have passed since the final payment.
For additiaboutal free informatiabout about bankruptcy go to www.declaringyourselfbankrupt.org where you will find a lot of useful informatiabout and advice about declaring yourself bankrupt.
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Declaring Yourself Bankrupt – Where to Start?
We live in an age of easy credit. OK, the banks and financial institutions have caught a cold in recent years making obtaining credit harder to obtain, but for many people a worldwide recession combined with high personal borrowings and credit card debt, has resulted in real financial difficulty.
Credit cards have perhaps been the main reason for many people’s problems. Many have been seduced by the “live for today” attitude of the boom years, spending on credit cards with no thought as to how they were going to pay them off, only to find the interest payments almost impossible in the lean times.
Of course, one can buy some time by transferring some credit card debt to a card with a lower interest rate, but this does not solve the problem.
Declaring yourself bankrupt should only be considered when all other options have been examined in detail. The appeal of bankruptcy is the lure of starting one’s financial life again, with all debt taken away, a fresh start.
In addition, various companies have sprung up in recent months offering to handle your bankruptcy case for you, without fully explaining the consequences of personal bankruptcy. These should be treated with care.
If you decide bankruptcy is the way forward, then you should hire an experienced bankruptcy lawyer. They are not cheap, but they will explain everything fully and in detail, and take you through your options. This is one area of expense that should not be scrimped on – your financial future depends on it.
Before declaring yourself bankrupt, you need to check that you are, in fact eligible. There are 3 possible reasons for ineligibility.
If in the last 180 days you have, of your own accord, dismissed your own bankruptcy case you are ineligible.
If in the last 7 years you have been granted a bankruptcy discharge, you cannot file for bankruptcy.
If you have had a petition for bankruptcy discharged (you did not adhere to the bankruptcy code of practice) in the last 180 days you are ineligible.
Assuming you do not fall into any one of those criteria, you may proceed.
You need to file under one of the bankruptcy “chapters”. Your lawyer will advise which is appropriate for you and will probably choose either chapter 13 or Chapter 7.
There are advantages and disadvantages to both chapter 13 and chapter 7 bankruptcy. Chapter 7 is often the preferred chapter because although you have almost all your assets sold, any debt still outstanding is simply written off (with some exceptions), giving the petitioner a clean financial slate, whereas chapter 13 is a repayment plan over a 3 to 5 year period.
For additional interesting information about declaring yourself bankrupt, including information on angles to consider before filing and information on lawyers, visit www.declaringyourselfbankrupt.net. Visit the Uber Article Directory to get a totally unique version of this article for reprint.