Bouncing Back From An Illinois Bankruptcy

Every year, thousands of your neighbors obtain short and long-term debt relief through bankruptcy. Because of the automatic stay, most lenders cannot take any adverse action against most debtors while their cases are active. Furthermore, because of debt discharge, debtors no longer have any legal obligation to repay most or all of their unsecured debts.

But, the best bankruptcy attorneys in Chicago do more than just file paperwork and attend hearings. They give clients the tools they need to recover from bankruptcy and optimize their fresh financial starts. Here are three of the more common tools.

Remain Current on Secured Debt

In most cases, debtors already have the best tool for bankruptcy recovery right in their hands, and the system lets families utilize this tool to the utmost.

Estimates vary in Illinois, but most people agree that paying bills on time is the best way to increase a credit score. Most monthly bills, including student loan payments, auto loan payments, and mortgage note payments, are reported directly to the major credit bureaus. Late payments remain on a record for several years. The good news is that on-time payments stay in a prominent position for several years as well.

It’s usually a good idea to include a little extra with each payment. Be sure to specify that the extra money should be applied to the unpaid principal balance. Otherwise, the moneylenders will apply the funds to interest. In this way, Illinois residents can build up a reserve that helps them weather future financial storms.

Get a Credit Card

Since many Illinoisans file bankruptcy because of credit card debt, it may sound odd to advise debtors to borrow more money on plastic. But responsible borrowing is a great way to build positive credit history as well, and it is foolish not to take advantage of this opportunity.

A secured card is a great option for many recent bankruptcy filers. These cards have low credit limits and are relatively easy to obtain. If at all possible, find a card that does not have a “secured” notation on your credit report.

Opinions vary slightly in Indiana as to the best payment method, but everyone agrees that borrowers should keep the balance very low. Some say it’s best to charge something every month and pay the balance in full every month. Others say it’s better to charge something every month and pay most of the balance, so the bank makes a little money on interest. It may be best to try each method, monitor your credit report closely, and see which one has a greater positive impact.

Negotiate with Moneylenders

Before bankruptcy, Illinois moneylenders had the legal right to demand whatever payment was provided in the credit or security agreement. After the debt is discharged in bankruptcy, the moneylender has no legal right to demand even one penny, in most cases. In other words the tables have turned. Once, the moneylender had all the cards. Now, you have them all.

Sudden financial advances often come along as unexpectedly as sudden financial reverses. If you are the beneficiary of such an improvement, reach out to unsecured creditors. Sometimes, they are willing to remove a debt from a credit report if they receive a few cents on the dollar.

These negotiations can be touchy in Indiana, so be sure and work with an experienced attorney before you pick up the phone to call a moneylender.

Contact Experienced Attorneys

Properly done, recovering from bankruptcy is almost as easy as filing it. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. After hours visits are available.

Resource:

uscourts.gov/news/2018/01/24/bankruptcy-filings-fall-07-smallest-12-month-decline-2010