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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