Month: December 2016

How To Survive After Bankruptcy

Review your credit report

After 60 days of closing the bankruptcy case, request for your credit report. Check for any errors (inaccurate, outdated, incomplete or unverifiable information) which can be legally corrected or removed by the credit report agency. Write a brief statement to the agency explaining the reasons that led you to file for bankruptcy and what you’ve done to solve your financial problems. This explanatory statement (30- 50 words long) will always appear on your credit report unless you request for it to be removed.

Get a secured credit card

With a bankruptcy charge, it’s important to demonstrate that you are credit worthy. Get approved for a secured credit card. With this type of credit card, you are only allowed to spend what you’ve deposited in your account ahead of time. Make timely payments before any interest accrues so that the bank can forward a good account history to the reporting agency.

Choose a secured credit card from an issuer who reports to one of the three major credit reporting agencies to ensure it helps to rebuild your credit score. Try not to apply for too many credit cards (or new credit) because creditors always check your rating before approval and this may lower your score.

Automatic payments

To rebuild your credit by making sure you pay all bills on time, choose to automate all your recurring bills. This includes rent and utilities. Consider taking steps to reduce your monthly bills such as moving to a cheaper home where rent and utilities costs less, getting rid of cable and cell phones.

Set a realistic budget

Write down your expenses for the last three months and compare this with your monthly income. Set boundaries as to how much you can spend by making sure you live within your means.

Using your bank account

Always avoid overdrafts, bouncing checks or incurring bank charges. Use your bank account responsibly because whatever you do will show up in your credit report. Even the small bills should be paid on time.

Make smart financial choices

Avoid any situation that will put you in debt again. Whether it means changing your group of friends, taking a different route to work so you don’t pass your favorite mall or cutting back on eating out, simple changes can make a big difference to show the credit company you’ve reformed.

Set aside an emergency fund

Work towards rebuilding your savings by setting aside 5% of your net income every month. You can set up a standing order at your bank that automatically withdraws the money from your checking account and sends it to your savings account. It will help you to avoid borrowing money or worse, taking a payday loan during emergency situations.

Share your plan

Talk to your family regarding the bankruptcy case and the mistakes that led to that experience. Let them understand what lifestyle changes need to be made in order to rebuild your credit. Some members of your family can really hold you accountable.

The situations that led you to file for bankruptcy did not happen overnight. In the same way, it’s likely to take some time before you can rebuild your credit history. The key is to learn from your mistakes and make sure all your payments are made in good time, all the time.

Guide to Recover From Filing After Bankruptcy

The Fastest Ways to Recover from a Bankruptcy

No one expects being in a financial bind (personally or business wise) that makes them have to file for bankruptcy. In the worse case scenario if you have to file for bankruptcy (whether it is chapter 7 or chapter 13) understand that it is not the end of the world. All you have to do is understand that there is a way to rebuild your finances back up to normal and eventually live life stress free again (at least in this situation).

Save, save, save!

The main key to recovering from a bankruptcy is beginning to save your money wisely. After a financial burden such as bankruptcy you will not only have to pay off your debt (which could include interest) in addition to daily living. Once you begin saving your money and budgeting correctly you will be able to pay off your debt while being able to pay current bills and other life necessities.

Re-adjust your lifestyle

This element goes hand in hand with the first step, which is to save your money. Although it may be a bit tough mentally to scale back on your lifestyle, at the end it will be all worth it. Maybe you will not be able to go out and splurge on entertainment events or eat your favorite food every single day. It will take some time to adjust and get back to. Don’t worry… in due time you will be able to get back to your normal lifestyle. When you do, be sure to reward yourself once you are back to where you are financially stable and comfortable.

Apply for a secured credit card when it is time

Once you get back to a place where you can begin rebuilding your credit, it is important to start off small. The time in which you can apply for a secured credit card line will vary depending on your situation. This time frame can be 6 months or 2 years. Just remember to not make the same mistakes you made before.

Keep a positive attitude

Although this is not the best situation to be in and it may be easier said than done, stay positive. In due time, everything will be taken care of and it will only hurt you more (mentally) if you keep reflecting on the negative more than the positives that will happen as you recover from bankruptcy.

How To Improve Your Credit Score After Bankruptcy

Most people don’t pay much attention to their credit score, which is easy to do when you’ve always been able to pay your bills on time and haven’t acquired much debt. But even the most responsible consumers can be hit with unforeseen circumstances such as a job loss or medical bills. Credit cards may be able to float the expenses for a while, but eventually the debt can mount up to a point where payments are no longer manageable. Missed or late payments can lower your credit score, but you may avoid bankruptcy, hoping to stop any further damage. However, sometimes bankruptcy is the correct choice, and there are things you can do to rebuild your credit score after filing.

Your Credit Report

If you have a pattern of late payments, filing bankruptcy can discharge many of your unsecured debts and put an end to those late payments. A bankruptcy will lower your credit score, but after you file, you’ll be given a “Discharge of Debtor” document that shows your debt has been forgiven. At this point, negative credit events stop, and you can begin establishing a positive credit history. First, you’ll need to request credit reports from the three credit reporting agencies: Equifax, Experian, and Trans Union. Review all of the information listed on your report to ensure accuracy, particularly that any debts included in your bankruptcy show a zero balance. You can correct any errors by contacting the credit agency.

Rebuilding

After ensuring you have a clean credit report, you can begin the work of adding positive elements. You will most likely receive credit card offers as soon as your case is resolved, but be sure you review the terms carefully before accepting. You may need to start with a secured credit card with high interest rates and steep fees. While this is not ideal, it’s a place to start, and you can avoid paying any interest by making only small purchases and paying them off completely, on time each month. You might even want to use the credit card for a small monthly bill and set up an automatic payment, essentially ignoring the fact that you have access to credit to avoid the temptation to overspend. As time goes by, you’ll receive better offers for new credit cards or may be able to renegotiate the terms of your current card. Soon, your credit score will improve and you’ll qualify for better and better options.

Moving Forward

Just like most negative events in life, ignoring your credit will not result in improved circumstances. It’s best to be fully informed about your financial situation and take direct action to make changes. If you’re in debt that you feel you’ll never be able to pay off, the first step is to determine if you can revise your budget to get back on track. If this isn’t possible, let me help you explore your bankruptcy options. After making this bold move, the opportunities to rebuild your credit will present themselves, and you’ll get back on your feet.

When Bankruptcy Discharge Tax Debt

It’s no secret that being in debt is one of the most stressful life events one can experience. But for most types of debts, there are solutions. Many creditors, such as credit card companies and medical facilities, will be glad to set up payment plans for you to ensure your debt is taken care of. Some hospitals even have funding available for those who cannot pay their medical bills. You may also be able to discharge unsecured debts through bankruptcy. However, when it comes to tax debts, the federal government can be a little more difficult to work, and tax debts are not dis chargeable through bankruptcy. There are always exceptions, and a Bankruptcy Attorney can help you work with the government to take care of your tax debts.

How are Tax Debts Handled?

While you may not be able to discharge tax debts through a Chapter 13, the amount you owe will be taken into consideration as we design your repayment plan. You may be able to discharge back taxes when you file a Chapter 7, but only if you meet these five criteria:

1. In general, only income taxes may (or may not) be included in a bankruptcy; all other types of taxes are generally excluded.

2. You may not include your tax debt if you’ve committed tax fraud or intentionally evaded paying taxes. In these situations, you’ll also be facing other legal consequences as well.

3. Your tax debt must be at least three years old as of your bankruptcy filing date.

4. You need to have filed a tax return for the year that you owe taxes at least two years prior to filing bankruptcy.

5. You’ll need to meet the “240-day rule,” which means the taxes either need to be not yet assessed or have been assessed at least 240 days before filing bankruptcy.
If you fall far enough behind on your taxes, the IRS may issue a tax lien against your property. In these situations, you may be able to include the taxes in your bankruptcy, but this would not apply to your lien. You’ll still owe the lien amount, but the IRS cannot garnish your wages or take control of your bank accounts to collect the debt. To take care of the lien, you may need to sell your property and pay back the debt, negotiate a payment plan, or even negotiate a settlement for a lower lump sum. This can be tedious and stressful, but may be worth the effort on your part.

Professional Guidance

If you’ve received notifications from the government, especially related to tax debt and liens, it’s important to act quickly. It can be intimidating to deal with government agencies, especially when money is involved. A Bankruptcy Attorney can offer professional advice so that you can confidently move forward and take control of your situation.