Now that Christmas is past, many consumers are starting to second guess the credit card debt they ran up over the holidays. With the new year approaching quickly, many bankruptcy attorneys are expecting a very busy year in 2011. Many are expecting the numbers for bankruptcies filed in 2010 to break all records in the past. With unemployment still at 9.7%, the bankruptcy rate is not expected to drop anytime soon. Having buyer's remorse won't help the consumer get out of debt, but bankruptcy will. Being unemployed and unable to pay your credit card debt,can give you good reason to look into filing Chapter 7 or Chapter 13 bankruptcy. Depending on the debtor's situation both chapters of personal bankruptcy have benefits with similar end results. A Chapter 13 bankruptcy was designed to pay back the creditors over a 3 to 5 year period along with allowing some of the unsecured debt to be forgiven at the end of the payment plan. Usually the main reason a debtor files Chapter 13 is because they have property they want to protect and keep. On the other hand, a Chapter 7 bankruptcy wipes the slate clean, but there is a chance that some property might have to be surrendered if it's not protected by the exemption laws.
Going through bankruptcy will have a negative impact on a person's credit. A Chapter 7 can stay on a debtor's credit report for up to 10 years and a Chapter 13 will usually stay up to 7 years. This is an FAQ of most people considering bankruptcy. Many people will ask their bankruptcy attorney how long will it be before they can get credit, and even one step further, get a mortgage. A Chapter 7 bankruptcy will damage a consumer's credit more than a Chapter 13. Think about it from a creditor's point of view, the last thing they want to see is a debtor walking away from their debts. Basically this is what happens in a Chapter 7. On the other hand, a Chapter 13 shows the creditors that you are willing to work something out and pay off your debts over a period of time. Bankruptcy does not have to ruin your life. Just because you file for bankruptcy doesn't mean that you will never get credit again. There are many lenders that are willing to take the risk as long as you can stay employed with a decent income. Creditors realize that you won't be able to file again for eight years, and if you filed Chapter 7, most likely you are debt-free. Some creditors see this as opportunity. Many of these can be predatory so individuals need to be careful.
The fastest way to rebuild your credit after filing bankruptcy is to reestablish a good payment history as fast as possible. Some people consult their bankruptcy attorney to get advice post bankruptcy. There are also good money management books written by authors like Dave Ramsey. Picking up one of these books will help reprogram a person on how to better manage money. An important lesson for a consumer to learn is to be able to distinguish between their wants and their needs. A good way to get credit quickly is to get a secured credit card from a major bank. These cards require a security deposit in a bank account and allow you to charge that amount. Having a monthly payment and paying it on time will quickly build a payment history. Another loan that's easier to get is an automobile loan. Once again, the debtor might pay a higher interest rate along with a larger down payment, but this will also help build credit history. After filing bankruptcy, the most important thing is to put it behind you changing all your spending habits and showing creditors that you're worth a second chance.
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