Ways to Implement Bankruptcy Recovery

It should mean a lot. Bankruptcy is one of the nastiest financial things that can happen to an individual, embarrassment not least among the drawbacks. But, consider that it can lead to denial of credit, housing, employment, along with other repercussions. Personal relationships may suffer serious damage. The trauma leading up to the bankruptcy and the process itself has led to many a divorce or lost friendship. And it is not cheap: Loss of assets, legal fees, other direct or indirect costs. You will be paying inflated interest fees and enduring uncomfortable terms for any future credit – if you can get credit – for a long time to come.What does bankruptcy mean legally?Two major forms of bankruptcy relief exist: Chapter 7 and Chapter 13. Chapter 7 calls for the complete liquidation of all personal assets (selling absolutely everything) to satisfy the interests of creditors. You may end up owning absolutely nothing, but you will not have any bills lingering from the past. Chapter 13 involves a court-supervised repayment plan that can last up to five years to satisfy the interests of the creditors. Usually the paycheck of the defaulter is garnered for a certain amount each month. Some assets, such as a home or a vehicle, may be retained by the defaulter. Though future lenders may look more kindly on a Chapter 13 bankruptcy, they are basically equal and the road to recovery is about the same.What is your first recovery goal?Your bankruptcy can stay on your credit history for up to ten years. Do not stand still for those ten years. First, pull a copy of all three credit reports and scrutinize them for errors and omissions. Chances are you will find a number of mistakes and you should write to each of the credit agencies disputing the information and asking them to remove them from the report.How do you start repairing your credit?Consider opening new accounts where you can. Do not go in over your head and make payments on time. Another good method to start improving your score is to take out a secured credit card. See a bank or credit union for details. Generally, you make a deposit that establishes your spending limit and then you must make payments on what you purchase. Taking these steps is important. Be patient. It will take some time for you to reestablish your credit worthiness, but you can do it.Can you just forget the past?Once you have learned your lesson about your past irresponsible credit behavior, you need to reset your priorities regarding how you should live. Indeed, some of your financial difficulty may have been caused by plain old bad luck. That raises the question: Why were you not responsible enough to set aside money to get you through hard times? Nothing is promised to anyone and everyone should be able to cover their own back. Unlike in the past, your focus should be proper debt management, long-term savings, and responsible spending.Bankruptcy is a serious matter. It is not the end of life as you know it. Many have lifted themselves up and started living responsibly and are once again enjoying life. Once you are on the proper path, you may be pleasantly surprised how new financial responsibilities may offer themselves to make your future quite bright.