Applying for Bankruptcy

Anyone contemplating applying for bankruptcy should first employ the services of a professional bankruptcy lawyer; this is likely to be a difficult time for most people in serious debt. Whilst filing for bankruptcy requires a little more work and preparation than it did before the changes in law, most of that work will fall on your attorney to complete. Fortunately these extra initial steps for the debtor do not change what happens once the bankruptcy petition as been filed so it should proceed exactly as it would have before.

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One important thing to remember is that most individuals who file for bankruptcy protection don't lose any property as the U.S. bankruptcy code provides exemptions. These exemptions allow you to keep a certain amount of value in large property like your home and an automobile. In addition to this there are extensive exemptions for clothing, furniture, and personal property.

Some States also have additions to the federal code but your bankruptcy lawyer will be able to inform you about these and how they will affect your bankruptcy period. The fact is that the vast majority of individuals filing for bankruptcy are not wealthy. They do not own large value items or have money hidden away. It is important that what they do have is protected from their creditors as much as possible.

However, your bankruptcy will be on your personal credit history record for 10 years but that is not all. This is not the problem that it may at first appear as most of the scoring for your credit is taken from the more recent credit transactions. What this means is that within a relatively short space of time after you become bankrupt you will start receiving credit applications but at this stage you must be very careful.

There are a number of unscrupulous companies that will wish to give you credit. The rates they want to charge will be much higher than normal and there may also be additional charges. If you are not careful, you could find yourself in debt once again. Do take advice from your bankruptcy lawyer. However, by only accepting credit accounts you can handle, and making payments that are timely and are more than the minimum required, you can begin to rebuild your credit.

For careful individuals, this credit rebuild can be as little as two to four years providing everything is kept up to date. Although it will still appear on your credit record, the bankruptcy should not affect the chances of you buying a house or arranging other unsecured loans, providing you keep your credit record clean.

It is usually the result of a set of unfortunate circumstances that leads to a bankruptcy. It is not because the individual is a failure looking for an easy way out of his debts as the credit companies would like you to believe. If this attitude continues, it will just ensure that legislation will become more restrictive. It will therefore become increasingly difficult to apply for bankruptcy. Don't be fooled though, because your bankruptcy lawyer will tell you that most people that file for bankruptcy protection have just been unlucky and never had any intention of this happening.

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