Bouncing Back from an Indiana Bankruptcy

Thousands of your neighbors need a financial fresh start. That’s exactly what bankruptcy does. Chapter 7 eliminates most unsecured debts in only a few months. Chapter 13 gives distressed debtors up to five years to catch up on past-due secured obligations. While the case is pending, the Automatic Stay prohibits most creditor adverse actions, including harassing phone calls, collection lawsuits, and repossession or foreclosure.

By itself, a fresh start is a legitimate reason to file bankruptcy. But an Indiana bankruptcy lawyer goes a step further. Attorneys do more than file forms and represent you in court. Bankruptcy attorneys also give people the tools they need to make the most of their financial fresh starts. In most cases, after a few years pass, many people do not even remember that they filed bankruptcy.

Build a Secured Debt Reserve

Secured debts include things like home mortgage loans and vehicle loans. Making thirteen payments a year, as opposed to twelve, is a great way to build a financial reserve.

Most people will not miss the extra $50 or so per month. Be sure you designate the additional payment as principal payment. Otherwise, the lender will probably apply the money to prepaid interest. That application does not help you build equity in the real or personal property.

They say that lightning never strikes twice in the same place. That may not be true of lightning, and it’s definitely not true regarding job loss, divorce, and the other financial storms of life. Another such event will probably strike your family. When that happens, a financial reserve cushions the blow.

If the debtor has additional equity, some lenders will allow the debtor to skip a couple of payments. Other times, additional equity builds goodwill. As a result, the lender might allow the debtor to defer a few payments to the end of the loan.

Remember What You Have Learned

Bankruptcy, especially Chapter 13, encourages financial discipline. Most people must cut entertainment and other expenses almost to the bone in order to make the monthly debt consolidation payment. When the protected repayment period ends, don’t let that financial discipline end.

All bankruptcy debtors must take two debtor education classes. Frequently, it’s a good idea to take the first class online and get it over with quickly. Try to take the second class live. Indiana trustees often sponsor free debtor education seminars. The class might be boring, but you might find a nugget or two that helps your family be more financially solid.

Obtain a Credit Card

It probably sounds odd to advise former bankruptcy debtors to borrow more money. But responsible credit use helps you make the most of your financial fresh start.

A secured credit card with a low credit limit is a good place to start. If you can find a card that does not include a “secured” notation on your credit report, that’s even better.

Use the credit card each month and pay the balance in full each month. Your credit score will steadily increase. After all, a credit score measures your ability to responsibly borrow money, and not your ability to pay cash for everything.

Count on Dedicated Lawyers

Bankruptcy gives people fresh starts. The rest is up to you. For a free consultation with an experienced Chicago bankruptcy attorney who also serves communities in Indiana, contact the Bentz Holguin Law Firm, LLC.

Resource:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcy-basics

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