Bankruptcy – Is It Good for You?
With the last decade’s recession causing a huge spike in the number of people who fall under the qualification of bankruptcy, a lot have given serious thought on filing for bankruptcy. As an example, two counties in Baltimore, Maryland are in the top 100 counties with the highest bankruptcy rates in the country. Given these numbers, you might want to evaluate your situation and if you feel you qualify as well, you might want to get with your nearest Baltimore bankruptcy attorney.
Since the downturn of the economy, the number of bankruptcy cases has risen dramatically. In 2007, the country’s total was only at a little over 820,000. From 2008 to 2011, it was consistently above 1 million! The economy is now normalizing and getting back to the pre-recession numbers of just over 800,000.
You might say that that’s all well and good, but you believe that at this time you still are someone who needs to file for bankruptcy. This article will help you out and see if indeed you are right. First off, bankruptcy is more of a solution for people in over their heads in debt and don’t have the means of paying it off. Look at all your debts and determine if:
1. Unsecured debts (no collateral) total more than 50% of your total annual income
2. With extreme budgeting, you still don’t see yourself being able to pay off the debts within 5 years
3. Your monthly payments of the debts are eating up a huge amount of your monthly income.
4. It interferes with your rest time, personal relationships, and all other areas of your existence.
If these ring true for you, see if you can find a non-profit credit counselor and get advice from there. If the advice is to file bankruptcy, then it is time to find a trusted Baltimore bankruptcy attorney.
Bankruptcy can definitely be a relief as it means the end of all those irritating, sometimes condescending collection calls, any wage garnishments that may be in effect, and depending on the type of bankruptcy, you may have no more overwhelming debt left like medical bills and credit card bills.
Now understand, there is no encouragement here to file for bankruptcy. The only this is that if the experts suggest it, you might want to listen to their pieces of advice. Know also that there are negative effects for you when you do file for bankruptcy. These effects may affect your financial freedom over the next decade and may interfere with your quality of life. As such, be ready to take the necessary actions to mitigate or soften the impact of filing for bankruptcy.
When you file for bankruptcy, it has a lasting impression on your credit history. It stays on your credit report for up to 10 years! As such, it’ll be harder to get an unsecured credit or loan. You will need to start building a positive credit history as soon as you get out of bankruptcy. Here are a few steps you might want to try:
1. Budget your money or income – Live within your means and set aside a portion of it for your emergency or contingency fund. This will help you from having to borrow or loan again due to dire need or unexpected expenses that blind side you. The goal is to be able to set aside a total of six months of living expenses. You might say, that’s going to be hard… so start small. A few hundred dollars should be a good start.
2. Show the money – Live on cash by buying only in cash. This definitely allows you to spend only what you have. If you stick to this rule as often as you can, you’re mindset will definitely tide you over the bankruptcy.
3. Rebuild your credit by applying for a secured credit card – This will require you to put down a deposit on this card which will at most times act as your credit limit. In essence, you are still only using what you can pay for.
4. Get yourself as an authorized user or secondary card holder – This applies for an account that builds credit on an authorized user.
5. Cosigning – If a family member or friend trusts you enough, have them cosign on a credit card for you.
6. Use whatever credit you get wisely – Do not go beyond the desired credit utilization ratio which is 30% or less.
Hold it! Don’t get ahead of yourself. Look to get a personal bankruptcy attorney and get all the necessary information first. A well-informed decision is always the way to go in matters of money.
AUTHOR: Lalee Argent
Copyright Richard Hackerman, Attorney at Law
More information about Richard Hackerman, Attorney at Law
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.