Paying Debts After Personal Bankruptcy

No one really ever wants to file for bankruptcy, but sometime it’s in their best interest. Pride is one of the emotions that make it hard for people to file for personal bankruptcy. In essence, they feel they’re admitting failure. If your debt is running out of control, not being able to even pay your rent or fill your car with gas to get to work, you need to face the hard facts. It doesn’t mean you’re a failure, with the economy in the tank many Americans are suffering the same financial problems. In a chapter 7 bankruptcy, all your unsecured debts will be eliminated unless of course you would like to pay some of them back.

Some people filing bankruptcy deal with guilt feeling they’re walking out on their debt. If an individual voluntarily wants to take it upon themselves and pay someone back, no one can stop him. Once a person files for personal bankruptcy and gets their discharge in the mail, they no longer have any liability to repay any of those debts back to the creditors included. Paying someone back won’t help your credit in a way that it could make you feel better about the situation. Sometimes people filing bankruptcy include a family member or friend as a creditor and this could cause some tension. In this case, to save face it might be a good idea to work something out because of your relationship with this person.

Dealing with bankruptcy can be very stressful, but having a good bankruptcy attorney to help you will relieve some of the pain and dispel some of the myths floating around. For example, many people don’t realize that creditors can no longer contact them after filing for bankruptcy. Because of the automatic stay a creditor must follow the court order or they can be punished for not complying. Another common myth is, the bankruptcy trustee will take everything the debtor owns and sell it to pay off the creditors. The trustee is only interested in non exempt property that has some value that could be easily liquidated without much effort. Lastly, many people think they can only file for bankruptcy once. This is also untrue, in fact, a debtor can file chapter 7 every eight years, and there is no limit on chapter 13.

People filing bankruptcy always hear the negative aspects of what it does to their credit report. It will go on your credit report, but your credit can be reestablished. Many times the fact of being debt-free after bankruptcy lowers a person’s debt ratio and actually improves their credit over the pre bankruptcy days. After filing bankruptcy, if you can build a strong payment record and continue to stay employed many times you can get a loan to buy a house.

Although it is true that many lenders are too anxious to loan money immediately following the personal bankruptcy as time passes trust will be restored. Usually in a couple of years, creditors are knocking on the doors with the same offers that got you in trouble in the first place. Credit is like fire, if it’s used carefully it can be very valuable, but out of control it can be very destructive. The one common factor that everyone agrees upon is after the discharge of a personal bankruptcy, a fresh start is not far away.

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Filing Personal Bankruptcy – Honesty Is the Best Policy

Hearing the old adage “honesty is the best policy” can’t be more true when it comes to filing bankruptcy. When an individual files for personal bankruptcy they need to remember to be totally honest with the bankruptcy court. If the bankruptcy trustee finds any discrepancies in the schedules along with improper valuations of property, they can charge the debtor with fraud. The debtor should always give full disclosure to their bankruptcy attorney of their property and their finances and let the attorney decide how the bankruptcy petition should be filled out. When filing personal bankruptcy, you never know who your friends are. Many times, creditors, neighbors and sometimes even friends and family members will call the court to disclose hidden property. The bankruptcy attorney needs enough information to defend the debtor, just in case there is any accusation.

After making the decision to file Chapter 7, it is important to go over your work schedule with your bankruptcy attorney. Some individuals that have been working a lot of overtime might have a problem qualifying under the means test. This is something for the debtor to discuss with their bankruptcy attorney and not do it on their own. Quitting an extra job or suddenly stopping the overtime work might sound like a good solution, but the bankruptcy trustee just might not see it in the same light. In most cases, bankruptcy attorneys believe it is not required for a debtor to work overtime just to make ends meet. After discussing this with a bankruptcy attorney, the debtor should be able to stop working all the additional hours. With the debtor’s income reduced, the attorney should be able to re-evaluate the bankruptcy schedules to qualify the individual with the means test. Depending on how much extra income the individual is earning it might be necessary delay the filing up till six months. The decision to quit working so many hours can have many consequences for the debtor. This puts the debtor in a tough situation with a choice of working an exorbitant amount of hours to try and dig out of a financial hole, or risk not being able to file bankruptcy.

Another income involved problem when filing bankruptcy is the way that the court views income. Any finances given or loaned to an individual in the six months prior to filing bankruptcy, is considered income. Most people don’t understand this and attorneys battle with it constantly. An example of this is an individual is on unemployment making $2000 a month. This not being enough to live on, they decide to take money out of their pension to the sum of $20,000. Thinking their pension is protected and the court cannot take this money would be incorrect. Looking at the timeframe when the money was taken out, if it falls in the six-month look back period is considered income. So now you could say that this individual made $32,000 in the past six months or $5400 a month. Depending on what state you’re in this might disqualify you to file for

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