They say that experience is the best teacher, and this is certainly true when it comes to the way that you handle on your financial affairs. If you never make any serious mistakes, that’s the best-case scenario. However, there is a silver lining of sorts that you could draw from if bad decision-making leads you to a bankruptcy filing. Many people who have this experience use it to their advantage, and they become very responsible and financially conservative going forward.
You could start to apply a new perspective right away when you are creating post-bankruptcy budget. If you file for Chapter 13 bankruptcy, which is a reorganization, you will be required to stick to a repayment plan over a three to five-year period. The structure in and of itself will help you to develop a sense of financial discipline. After the bankruptcy has been discharged, you will invariably emerge with a better understanding of your monetary limitations as you continue to rebuild your credit standing.
The other type of bankruptcy that is most commonly used by individuals who are overwhelmed by debt is a Chapter 7 bankruptcy. With this type of bankruptcy, unsecured debts like credit cards and health care bills can be completely discharged. You would be allowed to maintain ownership of your home and your car if you are current on the payments. Once you are free of the burden of the unsecured debt, you will probably find it much easier to pay your other bills.
Perhaps surprisingly, you may be able to obtain lines of credit shortly after you file, because your debt to income ratio will improve. Plus, you would not be able to file for another Chapter 7 bankruptcy for eight years, and this would be a positive in the eyes of lenders. However, this is a dangerous area to get into right after filing for bankruptcy. Plus, the interest rates and fees will be higher to reflect the perceived risk.
If you are having trouble keeping up with your bills, you should certainly explore the legal options that are available to you. We have offices in Tacoma, Vancouver, Tri-Cities, and many different cities in the state of Oregon. Our firm offers complementary consultations, and you can set up an appointment if you send us a message through our contact page.