Although bankruptcy is regarded as a last resort by many, not everyone is qualified to take this option. For example, did you know that you have to be able to pay for the filing, and some trustee fees too, and be able to make a deposit towards this when you file? That’s right, you have to have funds available before you can file. It’s rather like the bank charging the large amount they do for the Non-Sufficient- Funds checks.
When you meet with the bankruptcy trustee, you need to have a full accounting of the amounts you owe to creditors, what the purchases were, what your income is, and what your living expenses are. You need to include the income of your spouse too, even if it is only you that is going the bankruptcy route. The trustee will help you decide whether it is a joint petition, or an individual bankruptcy, but either way, the trustee will need to know joint income and living expenses.
Once you have filed for bankruptcy, you will still have to keep in touch with your bankruptcy trustee, giving income and expense statements as required, attending financial management courses and the like, which are part of the bankruptcy requirements. Once all this has been completed for the length of time the bankruptcy court decides, provided it has been successfully completed, you will be granted a discharge from those debts filed in the court by your trustee.
After this discharge, you can start the process of rebuilding your credit score, which will take a little time, but not perhaps as long as you might imagine. Perhaps the best way is to start by applying for a secured credit card which is one that you add money too first, and then you can purchase items up to this limit. There is usually a charge to add funds to the card, but this is a good way to get you back into using credit after having only the option of cash during your bankruptcy. With careful management of your card, you will soon be able to apply for an unsecured card, with a low balance to begin with. Use this credit wisely, and never use more than 50% of it. Pay at least the minimum balance promptly every month, but preferably, pay it all off each month. This will prove that you can use credit wisely, and are a good credit risk.
With careful management of your credit, and the knowledge you gain during your bankruptcy, you will very soon be gaining a credit score, and who knows, you may be buying your own home in just a few years after you have been discharged from bankruptcy.
{ 2 comments }