How To Put Bankruptcy In Your Rearview Mirror
According to the Supreme Court, the Bankruptcy Code gives honest yet unfortunate debtors a fresh start. But it doesn’t guarantee debtors a successful fresh start. After their bankruptcies end, former debtors can squander or savor their fresh starts.
A good Chicago bankruptcy lawyer maximizes your fresh start, before, during, and after filing. Attorneys work with existing law to tailor a petition to your family’s needs. After the case goes to court, an attorney stands up for your legal and financial rights during meetings and hearings. After the judge closes the bankruptcy, a lawyer points you in the right direction.
Divorce, illness, job loss, and other financial storms of life usually cause bankruptcy filings. Poor spending habits often contribute to these filings.
Many people nickel and dime their way over the edge of a financial cliff. Ordering drinks with dinner, grabbing snacks at the gas station, and seeing movies that will be on streaming services in a month are just a few examples. There’s nothing wrong with these behaviors. Everyone needs to splurge sometimes. But if such behaviors are a habit, that’s a problem.
Bankruptcy, especially Chapter 13 bankruptcy, forces families to make changes. Chapter 13 debtors usually commit most or all of their disposable income to a monthly debt consolidation payment. A discharge order is not an all-clear signal that allows families to go back to the way things were before.
Cutting spending doesn’t end or avoid financial problems, but it doesn’t contribute to these problems either.
Many families already have the means to raise their credit scores after a bankruptcy filing. Paying bills on time, especially a home mortgage, auto loan, and other secured debts, is usually the best path forward.
That’s easier said than done, especially when the next financial crisis comes along. Most Chicago bankruptcy lawyers suggest that former debtors make thirteen payments a year on such debts.
The cushion builds goodwill with the creditor and may even allow a debtor to skip a payment or two when money gets tight. Additionally, these debts usually have no prepayment penalty. So, putting an extra $100 or so per month toward the UPB (unpaid principal balance) could save your family thousands of dollars in interest payments.
The credit restoration process sometimes needs a little more help. Responsible credit card use is a great tool. That may seem like an unusual idea. But a credit score measures the ability to manage credit, not the ability to eschew credit.
Many former debtors get a rush of credit card offers in the mail. Creditors know these debtors cannot get another bankruptcy discharge for several years.
We normally tell people to find a credit card with a low spending limit, charge several items on that card every month, and pay the balance in full every month. Sometimes, it’s better to leave a small balance, so the bank charges interest and makes some money. The effects vary in different situations, especially since no one knows how the credit score process works, at least with regard to specifics.
Work With a Hard-Hitting Cook County Lawyer
No matter what kind of financial problem you are having, a solution is usually available. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters throughout the Prairie State.