Life After Bankruptcy
P. Simon Mahler, First Houston NW Mortgage Bank
June 25, 2008
Vancouver, WA - 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. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.
Bankruptcy becomes a viable option for someone who is "upside down" in terms of cash flow. In other words, when a person 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. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.
For many homeowners in the midst of this upside down cash flow, speaking to a qualified mortgage professional is a much better option. An experience loan professional can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.
If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It's that simple.
When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, FBI and the IRS.
Here are some additional steps you can take to make the bankruptcy process as painless as possible:
Save all paperwork regarding your bankruptcy, and keep it organized. This will prove
beneficial after your bankruptcy as you now have all the pertinent information in one
place. Also, be sure to write down your discharge date. It's surprising how many people
forget to do this.
Establish a household budget. This can be accomplished in many ways, but there are
several inexpensive computer programs available which do an excellent job.
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.
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 improvement.
Tips for Rebuilding Credit:
If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive,
used car, and try to get a loan for it. It's a good idea to figure out what your budget
allows in terms of a dollar amount first. This means obtaining financing prior to
looking for a car.
Get a secured credit card. Secured credit cards allow for the cardholder to deposit a
said amount of money into an account, thus establishing the spending limit of the card.
Missed payments result in deductions from the account. Some of these cards will reward
responsible borrowers by raising the card limit without an additional deposit. Some
will even convert the account into a traditional credit card.
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. Some mortgage professionals will even have the lenders available for you just a year after a bankruptcy. If you're in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.
P. Simon Mahler is affiliated with First Houston NW, a licensed Mortgage Bank in the State of Washington. For a free copy of our Consumer Credit Scoring Booklet, contact P. Simon Mahler at 360-213-1104.
Bankruptcy becomes a viable option for someone who is "upside down" in terms of cash flow. In other words, when a person 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. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.
For many homeowners in the midst of this upside down cash flow, speaking to a qualified mortgage professional is a much better option. An experience loan professional can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.
If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It's that simple.
When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, FBI and the IRS.
Here are some additional steps you can take to make the bankruptcy process as painless as possible:
Save all paperwork regarding your bankruptcy, and keep it organized. This will prove
beneficial after your bankruptcy as you now have all the pertinent information in one
place. Also, be sure to write down your discharge date. It's surprising how many people
forget to do this.
Establish a household budget. This can be accomplished in many ways, but there are
several inexpensive computer programs available which do an excellent job.
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.
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 improvement.
Tips for Rebuilding Credit:
If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive,
used car, and try to get a loan for it. It's a good idea to figure out what your budget
allows in terms of a dollar amount first. This means obtaining financing prior to
looking for a car.
Get a secured credit card. Secured credit cards allow for the cardholder to deposit a
said amount of money into an account, thus establishing the spending limit of the card.
Missed payments result in deductions from the account. Some of these cards will reward
responsible borrowers by raising the card limit without an additional deposit. Some
will even convert the account into a traditional credit card.
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. Some mortgage professionals will even have the lenders available for you just a year after a bankruptcy. If you're in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.
P. Simon Mahler is affiliated with First Houston NW, a licensed Mortgage Bank in the State of Washington. For a free copy of our Consumer Credit Scoring Booklet, contact P. Simon Mahler at 360-213-1104.