If the recent economic downturn has left you in financial ruins, and your creditors aren't willing to work with you, it's time to consider bankruptcy protection. If you're concerned about how a bankruptcy will affect your credit, you should know that allowing your accounts to go into collection could end up hurting your credit more in the long-run.
While bankruptcy does stay on your credit report for 7–10 years, you can start rebuilding your credit once your bankruptcy debt has been discharged. This can help ensure that you've re-established a good credit history once the bankruptcy drops off your report. If you're going to be filing for bankruptcy, here are three steps you should take to avoid problems.
Get Legal Advice
If bankruptcy has become your only option to getting out of the debt you're in, you need to get legal advice. There are some legal issues that you can take care of by yourself. However, bankruptcy is not one of them. The laws governing bankruptcy are complex, and can be confusing. One mistake and you could have your case dismissed. An attorney with experience handling bankruptcy cases will ensure that you don't hit any snags with your bankruptcy petition.
Gather All Your Bills
Once you've decided to file for bankruptcy, you'll need to gather all your bills. Your attorney will list all your outstanding debts on your bankruptcy petition. Those debts will be discharged with your bankruptcy. However, if you haven't provided your attorney with a full list of your debts, some of them may be left off the petition. If that happens, those debts will not be included in your bankruptcy, which means you'll continue to be responsible for their repayment. Providing a complete list will prevent you from being left with unpaid debt once your bankruptcy is discharged.
Stay Away from New Debt
As soon as you realize that bankruptcy is in your future, you should stop taking on new debt. Taking on new debt either before, or during the proceedings, could result in those debts being left off your bankruptcy petition. This is particularly true if creditors can prove that you knew you couldn't afford the debt when you applied. Protect your bankruptcy proceedings, and wait until after your case is discharged to apply for new lines of credit.
If you're drowning in debt, and you've got no way out, it's time to talk to a bankruptcy attorney like Thomas A Blake near you.