How Bankruptcy Affects You

Bankruptcy, like everything else, has its consequences- both good and bad. If you plan to declare bankruptcy in order to get out of the sea of debt, you might want to know how bankruptcy will affect you and your life. Following are both sides of the coin to help you make the right decision.

The Negatives

  • Temporarily destabilized credit: A bankruptcy appears as a negative mark on your credit report, and once the bankruptcy is filed, it stays on your credit report for about 7 years or more. However, with time, the effect of bankruptcy on the whole ebbs away and your recent actions begin to highlight your credit report.
  • Problems in getting loans approved: Since the Bankruptcy filing appears as a black mark on your credit report, it would be extremely difficult for you to qualify for a loan in months directly following the bankruptcy. Even if you do qualify, it would be for low dollar amount-high interest loans only.
  • Trouble in getting work: Unfortunately, for some employers, bankruptcy is a reason good enough to not hire someone. Nowadays, employers carry out credit checks in addition to criminal background checks for prospective employees. So if you do not have a job at the time of bankruptcy, you might have trouble finding one immediately after.

The Positives

Fortunately, not everything resulting from bankruptcy is negative – no matter how we see it, bankruptcy is in fact is a protection intended to relieve the burden of liability for people struggling to make ends meet. Listed below are some of the specific positive effects you can generally expect when filing for personal bankruptcy:

  • End of lender contact: Once you file the bankruptcy, you are then legally protected  that takes effect. This protection stops all sorts of creditors from contacting you, which eventually means that you no longer have to be intimidated by threats of repossession, foreclosure or garnishment through any mode of communication during your case.
  • A new financial beginning: the decision to file for bankruptcy is a major step, and thus offers an important reward: a chance to rebuild your life financially. If your bankruptcy case proceeds normally, you have an opportunity to restructure your finances so that they are healthier and better than when you filed for bankruptcy.
  • Improved credit than before: Immediately after the bankruptcy, your credit rating will definitely take a hard blow, but as you learn from your past mistakes and take steps towards a better, financially secured life, you have a chance to create a strong credit.

For more on how to make the most of these positive effects and alleviate the damage from the negative aspects, you might want to approach credit counselors at GTA credit to steer you through this financial storm.

Smart Ways to Manage Your Credit

With bankruptcy plaguing the country, it is only necessary to know how one can stay clear of it. One of the biggest causes of bankruptcy in recent times is over spending, which leads to building up of loans and credit, eventually becoming a burden too heavy to carry. Listed below are smart ways in which you can avoid making a mess out of your finances.

Borrow Only What You Can Repay

For every dollar you borrow, make sure you have the capability of paying it back on time. Most of the times, creditors will make sure of that before lending funds to you; however, you as a borrower have the ultimate responsibility of making sure you honor your commitment. Draft out a plan so that you know what and how much you can repay.

Start Saving

Make it a habit to save money regularly. Set up a deposit account with little or no charges and transfer a certain sum of amount into the account each time you get paid. The money you save can pay for unexpected expenditures, or a vacation later.

Review and Pay Existing Bills on Time

Make an effort to pay all current credit card and utility bills on time. You can opt for the direct debit facility offered by your bank that makes regular payments against your account on your behalf. This way, at the end of the month, you will have only a nominal amount to pay or maybe none at all.

Take charge of your finances by reviewing your bills, bank accounts, and credit card activity statements on a monthly basis. This will not only help to investigate any erroneous or doubtful transactions, but will also bring to your notice any bills that you may have not paid.

Keep a Track on Your Credit Cards

These credit cards can prove to be fatal for your finances if not monitored properly. If you have more than one credit card, it is wise to only carry one with you. This not only saves you from unnecessary expenditure but also prevents credit card frauds in case your card or wallet is lost or stolen.

Close down any unused credit cards that you have in your possession – this will help you will smartly evade charges and fees on your dormant cards, not to mention curb the urge to overspend and use up additional credit.

Review Your Credit Report

At least once a year, make sure you review your credit report – always do it before you apply for further credit. The benefits of doing so are two-folds; firstly it will give you a clear picture of where you stand on your credit rating, and secondly, you can spot and fix any errors in the report that may affect your report adversely.

Still, if you are having trouble managing your finances, contact a credit counselor like GTA credit as soon as possible and allow them to help you.

 

Simple Ways to Avoid Bankruptcy

With an increasing number of people declaring bankruptcy in recent times, one lives in fear of the repercussions of even the slightest financial crunch that materializes in our everyday lives. Nobody wants it, nobody likes to go through it, but the truth is that reasons of bankruptcy vary from person to person and this crisis could hit even the most financially sound people.

Luckily, there are certain defensive measures you can take to avoid having to file for bankruptcy.

Settle Your Debts

Filing for bankruptcy may often lead to liquidation which means selling off all your assets and property; thus a smarter way to go about this would be to hold onto your wealth and still pay off your creditors by negotiating on your debts. You could opt for Debt Consolidation, Consumer Proposal , both of which allow you to make payments to lenders in easy affordable sums.

Paying of your debts will keep you in control of your finances and away from filing for bankruptcy.

Borrow from Family/Friends

Do not feel ashamed of asking your friends and family for financial help. Make a budget and estimate the amount you would need to avoid bankruptcy; you will know how much you need to borrow once you subtract the amount of money you can afford to pay yourself. Just make sure you have a comprehensive plan for paying back both your family and lenders on time.

Sell Your Property

Sell off the excess property to repay your lenders, or at least raise enough money to save you from filing bankruptcy altogether. This does not mean that you empty your house, but parting from a few valuable assets may prove a fruitful investment for your future. Besides, it’s always better than losing everything you own.

Make Sacrifices

Prioritize your expenditure – avoid unnecessary spending on things that could cost you everything you own. Start living your life fulfilling just the basic needs, restructure your spending pattern; save more and pay off your creditors.

Working on one or a combination of the above suggestions could save you from declaring bankruptcy. It will not be easy, but it sure isn’t impossible either. If you still feel it is too much for you to handle on your own, consult a credit counselor or personal finance consultant at GTA credit to get your finances back on track.

Life after Bankruptcy: Steps to a Fresh Start

Just as every action has an equal and opposite reaction, bankruptcy too has repercussions. Rebuilding your life after declaring bankruptcy may seem like a daunting task- starting anew on building your credit ratings, finances and emotional stability; but it can prove to be tremendously rewarding at the same time.

If you have recently filed for bankruptcy, it is essential for you to know that life after bankruptcy does not have to be about being a financial recluse. Rather, it is about a second chance at reforming your life and protecting yourself against future financial disasters. The following three steps will help you speed up your financial recovery.

No Shame No Guilt

Berating yourself in the aftermath of shame and guilt will only make matters worse. It will hinder your progress towards a new reformed life. People are forced into declaring bankruptcy often enough, be it due to unemployment, medical bills, or other personal setbacks.

A positive approach to the issue would be to make peace with your situation, making reforms, and moving on without self-pity or any negative thoughts.

Realistic Budgeting and Existing Bills

After bankruptcy, you need to be more watchful of your funds. Start off by listing down your cash inflows and outflows. Doesn’t matter if you have made one before or not; now is the time you need one more than ever. Plan your spending in a way that you do not end up stacking needless debt. Set aside an emergency fund which could come in handy if, God forbid, a calamity strikes out of the blue. Also prioritize paying your bills on time. You might want to consider setting up automatic bill payments, and of course, do not forget to pay your rent on time. Paying your current dues on time is the single most important step towards restoring your finances and credits.

Rebuild Your Credit with a Secured Credit Card

Improve your credit rating after bankruptcy by getting a secured credit card. This card will limit your credit to the amount you deposit in the account. Aim to progressively rebuild your credit by restricting your spending to minimal amounts as you work on paying off your existing debts as agreed. One thing to remember is that you stay away from secured cards that charge high fees.

 

It is particularly important to also keep yourself surrounded by the right kind of people. Friends, family, members of the church or others- people who encourage you, support you and guide you to a financially and emotionally stronger future.

 

You can always seek advice and counsel from professionals like the ones employed by GTA Credit Solutions to have a sound plan for rebuilding your finances and credit after bankruptcy.

 

Are You Heading Towards Bankruptcy?

With bankruptcy increasing at a disturbing rate over the past few decades, it is important for you to know potential pitfalls that might lead you to falling prey to it too. People often overlook alarming issues that can leave them insolvent; listed below are some of the most common reasons that lead to one having to file for bankruptcy.

1) Unemployment

Unemployment resulting from termination, resignation, or layoff results in loss of income. This could prove equally disastrous as most people are not fortunate enough to receive dismissal packages, neither are they given proper notice. With little or no income in hand for daily transactions and emergencies, the situation only worsens; piling up credit card bills to pay will only result in the consequences worsening.

2) Excessive Spending

The urge to spend is often irrepressible in some people – be it shopping, payments on car loans, credit card bills – they just don’t stop, piling up stupendous debts which they are unable to pay back. Further, if they lack access to funds from other sources like debt consolidation loans or friends/family- a bankruptcy declaration is the only solution they have.

3) Divorce

Marriage termination brings about major financial burden for both partners-ranging from the legal fees (that can be sky rocketing), division of the couple’s assets, verdict on alimony, to the chronic costs of maintaining two separate households after separation. The legal costs single handedly can force most people into filing for bankruptcy, whereas paying for child support and other household expenses just furthers the distress. Spouses who are not able to pay the agreed child support and alimony often leave the other partners destitute too.

4) Unforeseen Losses

Events like theft, natural disasters, death, or other unexpected ones may result in loss of property and finances. As these situations are unanticipated, they are not usually covered in a normal bankruptcy claim. Most people do not know that these events need to be separately insured for insurance companies to reimburse the resulting losses. These losses, if not insured, have to paid for by the bearer himself, which may not be possible.

Do be mindful of the above mentioned financial pitfalls as possible indicators of bankruptcy. You might want to obtain personalized credit counsel from qualified professionals at GTA credit to work out comprehensive credit management plans for you.