Post Bankruptcy Counseling

Post bankruptcy counseling encourages and organizes people and their finances after this financial and legal ordeal. Self-esteem is usually very low making it hard to get motivated toward a better life. With the help of personal bankruptcy counselors, a person can get their finances organized, which inevitably boosts self-esteem and encourages toward better financial decisions. Partnering with a friend or family member to start new habits can greatly improve the future. Finding a balance between keeping an entire paycheck in cash and spending it unwisely through debit or credit cards can be difficult as it is a personal decision. Making a plan for the execution of financial goals with personal bankruptcy counselors not only motivates, but helps a person understand the importance of each step of the process toward financial freedom.

Understanding personal habits leading to financial ruin allow for better future planning including savings for emergencies. Deciding on a good financial system through the many experts out there is the first step toward financial freedom and well as simple survival. Sticking with one system (as long as it works) increases the chances for success. Taking advantage of post bankruptcy counseling offers the required structure and knowledge for a person to be successful and financial management. Counseling may include tracking expenses, using an envelope system, and changing habits. Making these changes may be difficult, but with professional planning success is just a matter of time. Due to the overwhelming rate of bankruptcy filers failing to keep it together financially, focus and professional help is key to success. Credit card companies preying on financially uneducated and vulnerable people leads to more problems including a second filing. Coming to grips with the reality of a situation leads to a successful plan which only using credit cards in emergencies.

Though the economic trend of the current time is an indicator of the cost of living and availability of good paying jobs, it is not an excuse for poor money management. Personal bankruptcy counselors determine the fine line between unavoidable situations and personally invoked circumstances. This definition further aids in determining the required changes for financial success. These changes include eliminating interest earning accounts or at least lowering the interest rates if at all possible. Some instances where loans are still acceptable after filing include car loans, mortgages, and school loans. Post bankruptcy counseling may suggest debt consolidation to lower interest rates and make monthly payment easier. Caution may also be advised toward the type of company hired for consolidation unless a person can accomplish that task himself. Consolidating includes calling current loan companies and finding out the payoff balance. After adding all the debts together a person should find a loan with the lowest interest rate. Even though most of the debt discharged by filing, in some cases people choose to keep some items in order to build credit. Jesus answered and said unto them, Verily I say unto you, If ye have faith, and doubt not, ye shall not only do this [which is done] to the fig tree, but also if ye shall say unto this mountain, Be thou removed, and be thou cast into the sea; it shall be done. (Mathew 21:21)

Once a budget is determined by calculating net monthly income minus living expenses reality of the amount available to spend becomes evident. Realizing how much a person might pay in overdraft fees, late fees, interest rates, and unexpected expenses may become alarming and therefore motivate a person to avoid these expenses at all cost. Careful budgeting and eliminating the unnecessary monthly expenses at least for a while can dramatically aid in developing a sound financial plan. During this time of not paying on things such as cell phones, cable TV, additional car payments, and new clothing purchases can be effectively used to pay off debt or develop savings for emergency situations in the future. In addition, using barter and trade services with neighbors or co-workers can additionally save money leading to lower living expense. Personal bankruptcy counselors may have suggestions for organizations or individuals who can help. In addition to great money management a person needs to maintain steady work in order to prove to lenders the seriousness of personal change after bankruptcy. Even with steady work a lender may require a deposit of money for a loan, which may be granted by friends or family, however careful documentation of where the money comes from is crucial to lenders. Grants may also be available through private and government organizations.

Though a person may make many dramatic changes in lifestyle and spending habits, most lenders will not accept applications until two years after discharge. Finding creative ways to get through life without the use of loans may build even more character than proper money management. Debt causes stress and stress causes health problems, which cost money. Living life carefully decreases the instance of accidents, illness, and mistakes which all cost money. Post bankruptcy counseling can pinpoint these situations and offer solutions to harmful habits as well as aid in creating beneficial situations to enhance life. An enhance life will lead to better self-concept and therefore motivate a person toward accomplishing goals and dreams. More than half of people who file will file again within five years, which leads to a more difficult situation to get out of due to losing more possessions and lessening the probability of future financial success. Personal financial counselors can aid in drawing up a plan in order to help a person stay on track. Connecting with people who have a good handle on money management influences even repeat filers toward a more fruitful life.

Establishing Credit After Bankruptcy

Establishing credit after bankruptcy can be a daunting task but is possible in varying stages and time frames, depending on what type of bankruptcy has been filed. Bankruptcy is a word, that most people would rather never have to entertain in their vocabulary, regarding personal finances. There are times, however, when this legal method of removing debts must be taken in order to have a fresh start unencumbered by financial responsibilities that can never be reasonably met. Chapter 7 and chapter 13 are the two options that individuals have when making the difficult choice to declare that they are going bankrupt. There are different legal requirements between the two and each has its own set of positives and negatives that anyone considering this option must carefully analyze.

Chapter 7 is relatively simple in that, anyone who claims this legal option has most of his or her debts wiped away without having to repay them in the future. There are, of course, times when this option is all there is left to choose and it is the best way to find a fresh start financially. Divorce, unforeseen tragedies, such as illnesses and loss of income, are just a few of the many things that can happen to force someone to go bankrupt after having tried all other avenues of reprieve. "But my God shall supply all your need according to his riches in glory by Christ Jesus." (Philippians 4:19) This option has been looked at as a way to have a new beginning after being devastated by a mammoth debt load. While it is true that going bankrupt does offer a way to walk off from most debts, it also has its downside when refinancing after bankruptcy or rebuilding personal credit status.

Those who go bankrupt will endure having the legal action reported on all financial reports for ten years. Those who are fortunate enough to still have a job after losing so much will have to learn to live totally on a cash basis and pay as they go. They will have no credit to maneuver with and must depend on any emergency cash they set aside for unexpected bills or needs. Establishing credit after bankruptcy can be difficult because most credit institutions view those who have claimed a chapter 7 as high financial risks. In fact, those who file for chapter 7 are viewed more negatively by creditors than those who file for a chapter 13 since chapter 7 allows debtors to walk away from most debts. After 10 years of no credit, a person may begin to rebuild a financial status. However, for transactions such as refinancing after bankruptcy, most will pay very high interest rates for several years before receiving reasonable interest due to improved, personal credit.

For individuals who file for chapter 13, the legal requirements are quite stringent regarding income, repayment stipulations and personal lifestyle. This legal option requires the person who goes bankrupt to subject themselves to court appointed management of personal finances which includes expenditures on housing, food, transportation, education and other family matters. Court managed repayment schedules are also stipulated to pay back creditors over a period of time which can help in establishing credit after bankruptcy. This option is otherwise known as 'reorganization' and refers to redistributing personal finances according to a court mandate. A person may suggest to the court what he or she will need to live on including any educational costs for children and any unusual expenses. With the court approval of this amount, the rest of the income is divided among existing creditors. A pay off period for chapter 13 reorganization lasts from 3 to 5 years. A poor credit rating will remain on most people's records for up to 7 years with this method.

Most creditors view this form of legal option in a more positive light because of the attempt at repayment that is obvious when bankrupt individuals choose a chapter 13 legal filing. Interestingly, though, while those who file chapter 13 may not hit the bottom in establishing credit after bankruptcy, because of their efforts, a person who files chapter 7 has a better chance at repairing their credit earlier. Since chapter 7 entails an almost complete wiping of financial debt from a debtor's financial record as well as no court mandated financial controls, a person who goes bankrupt can begin to work on refinancing after bankruptcy and other issues as soon as is feasible. Those who claim chapter 13 must wait until their court mandated supervision is over before attempting to repair any personal credit.

Some of the basic ways to repair credit for both options is to always pay all bills on time, apply for a credit card as soon as possible, and to have a positive attitude to face all the difficulties ahead. If a legal filing was necessary because of some issue such as an ill family member or divorce, it is helpful to notate it in any applications for refinancing after bankruptcy or for any other reason. Creditors can be helpful to those who consistently commit to establishing credit after bankruptcy and do not give up when high interest rates or problematic financial questions occur. It is possible to live through a legal filing and go on to have a stable, financial future for those who are determined and dedicated.

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