Bankruptcy is an option worth considering if your debts exceed your income. However, it is important to weigh all your options and speak to a financial expert before filing for bankruptcy. A bankruptcy lawyer in Harrisburg PA can assist you with the bankruptcy process.
Start by putting together a list of your assets, debts and income. This will give you and anyone helping you a clear picture of your situation.
1. Reorganize Your Debts
The reorganization of debts in Chapter 13 bankruptcy makes your monthly payments more manageable. It also allows you to remove unsecured junior liens from real property through lien stripping and reduce the principal loan balance on secured debts through cramdown.
If you have been struggling with unmanageable debt, it may be time to consider filing for bankruptcy. However, it should be viewed as a last resort after you have exhausted all other financial options.
Once you have filed for bankruptcy, it is important to focus on rebuilding your finances. To do this, it’s helpful to create and stick to a budget. This can include setting savings goals and directing a percentage of every paycheck into a dedicated savings account. The more money you have saved, the easier it will be to pay your bills and build a secure financial future.
2. Stop Creditors from Seizing Your Property
Many people find themselves in financial trouble after suffering an unexpected setback such as a medical emergency, job loss or divorce. In desperation, they might have resorted to payday loans and other predatory lending schemes, or credit card debt with skyrocketing interest charges that caused their bills to spiral out of control.
A major benefit of filing for bankruptcy is the protection it provides from creditors who are unable to collect on outstanding debts. Creditors typically avoid seizing assets like cars and homes unless they have substantial equity.
A key step in rebuilding your finances is to create a budget that enables you to make on-time payments and reduce overspending. You should also work to establish an emergency savings account and consider a credit builder loan that allows you to establish a positive repayment history while building up a positive credit report.
3. Get a Fresh Start
Many people file for bankruptcy when they can’t afford to pay their debts. It should only be used as a last resort after all other options have been explored, but it can help people who are struggling to get back on track financially.
Rebuilding your credit and finances after bankruptcy will take time, but it’s important to stay committed to your financial goals. This may include creating a
budget and seeing a financial counselor to ensure that you are on the right path.
Once you have a fresh start, it’s easier to make smart life choices that will allow you to live the life you want. This can include taking on new job opportunities, buying a home or investing in property. It’s also a good idea to start saving money, even if it is just a small amount each month.
4. Rebuild Your Credit
After bankruptcy, it’s important to start rebuilding your credit. This can help you get back in the good graces of lenders, who may be more willing to lend you money when you have a solid credit history. This can include making sure there aren’t any errors on your credit reports that are dragging down your score, working to make stable employment a priority (job-hopping can be a red flag for lenders), and establishing a line of credit with a reputable lender.
You can also begin to build an emergency savings account by putting aside a small amount of money each month. This can be a great way to avoid relying on loans and credit in the future, and it can help you stay motivated to stick with your budget goals.
5. Get a Fresh Start
One of the most important benefits of bankruptcy is that it provides a fresh start financially. It gives you a chance to move on from the debts that prevented you from taking advantage of opportunities in your life because you were spending too much money paying minimum monthly payments and interest rates.
After your bankruptcy, you can rebuild your credit by getting a mortgage or car loan, which requires providing proof that you can pay off the debt. You may also qualify for a secured credit card that requires a cash deposit as collateral.
Establishing financial goals is also a key element in getting back on track after bankruptcy. It can help you stay motivated to stick with your budget and rebuild your credit score.