If you are considering filing for bankruptcy, there are things you need to be aware of before you do. If you have poor spending habits, filing bankruptcy can help you get rid of qualifying debts you currently have, but if you continue with those poor habits, you may be in trouble again.
Before you file for bankruptcy, you should be informed about the process, about your debts, and what happens after you file.
What Kind of Spending Habits Do You Have?
Does your debt consist of mostly credit card debt that you can afford to pay, but your spending habits are just too poor?
Write down all of you debts as well as your income. Include things such as groceries, gas, and other monthly utilities you pay for. If there is no wiggle room at all, or no way to pay for your bills without being negative each month, this is a problem.
If, however, you have enough monthly income to cover your debts but you spend too much money going out or on frivolous spending, you may benefit more from learning how to control your spending.
What Debts Are Included?
Not everything can be included in a Chapter 7 bankruptcy. If you have student loans that are outstanding, these cannot be included in your bankruptcy; these loans are debts that will not be forgiven and you will still be required to repay.
Other debts, such as recent spending on a credit card, may also not be included in your bankruptcy. This decision is going to be up to the bankruptcy trustee. The trustee may ask about these expenditures and may either tell you that they need to be repaid or returned in order to repay the debt.
Most other debts can be included in your bankruptcy including medical bills, auto loans, and even mortgages. If an auto loan or mortgage is included, your home or automobile may be foreclosed on or repossessed.
What Happens After Your File?
After you file for bankruptcy your creditors will receive a notice of your bankruptcy. At this point, your creditors should not send you bills or call your home. Inform them that you have filed for bankruptcy if you continue to get bills or phone calls. If the calls continue, give the creditors your attorney's phone number.
To complete the bankruptcy, it will either be discharged (which means completed), or it will be dismissed (which means there was a problem and it could not be filed). After your discharge, the debts that were included in the bankruptcy will be forgiven. These debts will still be on your credit report (and marked as bankruptcy), and will remain there for up to 10 years.
How Do You Rebuild Your Credit?
Your credit will not be ideal after you file for bankruptcy, but that doesn't mean you will not ever qualify for a loan again. You can rebuild your credit, but the process will take you some time.
To help you rebuild your credit, be sure to pay all debts including monthly utilities on time. Open a credit card with a low balance and spend a very small amount every month. Pay this small amount off immediately. This behavior will help you rebuild your credit, as it will show you can have a credit card, keep the balance paid off, and pay it on time.
Before you file for bankruptcy, be sure to be well-informed about the process, what happens during and after you file, and what can be included in the bankruptcy. Make an appointment today with Custer, Custer &Clark LLC Attorneys at Law for a bankruptcy consultation.