The Loan Lady Blog

Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process.  But with so many people having financial difficulties these days, bankruptcies are often discussed freely, with no shame or embarrassment.

Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. If someone has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.

One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. It is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy, however it can often compound the problem and serves only to delay the inevitable.

Here are some practical tips to keep in mind: 

1. Find a good bankruptcy specialist and follow his or her advice.

2. Establish a household budget and stick to it.

3. Save all paperwork regarding your bankruptcy, and keep it organized. You will probably need it again. Also, be sure to write down your discharge date. It’s surprising how many people forget to do this.

4. Throughout the bankruptcy, do your best to not only live below your means, but to save as much cash as possible. You never know what you may need it for once the process is completed.

5. Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.

Tips for Rebuilding Credit: 

• Get a secured credit card. Secured credit cards allow for the cardholder to deposit money into an account, thus establishing the spending limit of the card.  (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)
• Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.

While it does take time, there is definitely life (and credit) after bankruptcy.  I  work with an excellent credit rehabilitation company and can refer you for a free one-hour consultation.  Contact me at 408-354-5523 or paula@theloanlady.net to sign up for this. It is important to take positive steps to rebuild your credit.