How To Recover Quickly From Bankruptcy. High Converting Guide To Recovering Fully From Bankruptcy And Bad Credit Rating.

It is unfortunate that many bankruptcy attorneys do not give their clients more direction with regard to restoring themselves after their bankruptcy. There are some simple steps that anyone who files a bankruptcy needs to take in order to restore themselves financially.

Using these steps below, you can restore your credit and prepare yourself to become a home owner.

Tip! Pay all of your bills on time. Bankruptcy is a means to financial recovery.

1. Get a copy of your credit report. Many times (most times) the credit accounts that are absolved with your bankruptcy are not removed from your credit report immediately.

2. Have derogatory credit items removed from your credit report. For the items charged off in your bankruptcy, you will need to send a copy (not the original) of your bankruptcy discharge papers to all 3 of the credit bureaus asking them to remove these inaccuracies.

3. Pay all of your bills on time. Bankruptcy is a means to financial recovery. It is intended to allow you to “start over” financially. After your bankruptcy, you need to make sure that all of your bills are paid on time. If you are having trouble with an upcoming bill, DO NOT IGNORE IT. This is where most people go wrong. Call your creditors before they call you and let them know what your challenges are. If you can’t get a reasonable rep on the line, ask for a supervisor, but again, do this as early as possible, not the day the bill is due or after it is late. If you are having trouble with your bills, you may need to solicit some help.

Tip! It is also a requirement, for those wishing to obtain a bankruptcy home loan, to have a debt-to-income ratio of between forty-five to fifty percentile range.

4. Have a strong documented rental history. This is pretty critical, as it is most likely the largest monthly expense that you have. Underwriters (the people that actually sign off on your loan’s approval) will look very hard at how you have paid your rent as they are going to replace it with a mortgage payment of equal or greater size. It is very important to be able to document your rent payment history very specifically. If you rent from an apartment community, then all the bank will have to do is request a Verification of Rent (a.k.a. VOR).

If you have a private landlord, then the BEST way to document this is with cancelled checks for the last 12 months rent. Banks can do VOR’s for private landlords, but rarely do because they feel that a landlord may have a relationship with the borrower and say what the bank wants to hear to help them get a loan.

If you pay with cash or money orders, please stop doing this immediately and start paying with checks. Simply put, this is hurting you because by filing a bankruptcy you have already shown some financial instability. Paying your rent with cash or money order shows further financial instability and will not give you the positive rent history that the underwriter is looking for to give them the confidence in approving your loan.

Tip! Every single state in the United States has it’s very own interpretation on bankruptcy, some better than others. In some states you are permitted to hold onto your assets while other states grab hold of everything you own and require you to turn over ownership.

5. Apply for a secured credit card - A secured credit card allows you to make a deposit into an account to secure a credit card and then borrow against it to establish a new positive payment history. As time progresses, the bank may increase your credit line to an amount greater than your deposit, and then eventually return your deposit to you. (They will also often pay you interest on your deposit.)

Bankruptcy Mortgage Book. How To Qualify For A Home Mortgage After A Bankruptcy.

6. Prepare “non traditional” trade references - These are accounts that you pay on such as cell phones, car insurance, and store accounts which can be used to document a positive payment history, but would not be traditionally reported to a credit bureau. Ideally, if you can provide 3 of these accounts with a 12-month payment history, this will help us in convincing the bank that you are a good credit risk. The best way to document this is with a letter from the company stating that you have had a positive payment history with them for the past 12 months. Alternatively, you can provide 12 months of cancelled checks showing 12 months of timely payments.

7. Resist the urge (or encouragement) to buy a car. Some may tell you that this is the best way to rebuild your credit. The problem is that your interest rate will be so high, that your payments will make your debt ratios higher than normal, making it harder to qualify for a mortgage. Do you remember the figure of 45-50% of your monthly income that the bank will allow you to use towards your debts? This will quickly be absorbed by a car payment. Only buy a car if a) you NEED (not want) a car, and b) you have the income to cover the car payment, any of your current debts, and your proposed new car payment. We have seen SEVERAL people that have cars rather than homes because they went out and bought a car that they could not sell and their debt ratios were too high to qualify for a mortgage. It would be a shame to have a nice car (that depreciates daily), as opposed to a more humble car along with a mortgage on a home that gives you a tax break, and increases in value over time.

Tip! The next step in filing for bankruptcy is to determine exactly what assets you have available to you. Your assets include your recurring income from your job, your home and major items of personal property that you might own (including such items as motor vehicles).

I hope this is helpful and helps get you on your way to finding the home of your dreams.

Anthony Kirlew is an entrepreneur, author, and mortgage industry veteran and is the founder of http://www.bankruptcyloans.info Over the past several years, he has helped countless individuals and families obtain mortgages even in the most desparate financial situtations.

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Tip! The next step in filing for bankruptcy is to determine exactly what assets you have available to you. Your assets include your recurring income from your job, your home and major items of personal property that you might own (including such items as motor vehicles).

Finding yourself in a difficult financial situation can be scary. Facing the possibility of dealing with bankruptcy can be even scarier, especially since most individuals or businesses don’t spend time making themselves aware of the legalities that go along with the process. Since many debtors are ashamed of the situation, they often fear asking too many questions regarding the process. As bankruptcy is one of the most important financial decisions a business or individual will ever make, it is essential to have correct bankruptcy information before getting starting with the process.

The federal court systems in the United States deal with all bankruptcy information and set the laws regarding the process. This does not mean that an individual has to go to Washington D.C. to file though, as each state will deal with individuals and businesses during proceedings. This may mean going all the way to the state capitol though. The federal laws on bankruptcy information state that these laws are in place simply to give an honest, but fallible debtor a fresh start.

Tip! It is also a requirement, for those wishing to obtain a bankruptcy home loan, to have a debt-to-income ratio of between forty-five to fifty percentile range.

One of the most important pieces of bankruptcy information to know is that the courts don’t come to the individual or business to file, the individual or business goes to the courts. Simply by filing a petition called a Statement of Intentions, the debtor lets the court system know that they are applying for bankruptcy.

Just because a debtor files the Statement of Intentions does not always mean they will go all the way through the legal system. The courts will need to gather important bankruptcy information through forms that will need to be filled out by the debtor. These forms allow the courts to review a debtor’s credit history, list current creditors and the amounts of the debts, as well as current and past work history. From this the federal court system will make a determination as to whether or not a debtor can proceed with the court case.

Tip! It is true when they say that the bankruptcy laws can be rather complex. One of the most common is Chapter 7, which discharges all financial debts.

Keep in mind that the debtor does not have to hire an attorney to represent them through the proceedings, although attorneys can be a great source of knowledge regarding bankruptcy information. Many debtors are scared to hire an attorney because of additional charges that they cannot afford, but most attorneys are reasonably priced due to the circumstances. Often times attorneys will not charge a fee for an initial consultation when the debtor is simply trying to acquire bankruptcy information.

Tip! Pay all of your bills on time. Bankruptcy is a means to financial recovery.

Unfortunately, most of the general public does not have a thorough understanding of bankruptcy information. This causes misconceptions regarding bankruptcy. One of the major misconceptions of bankruptcy is that all possessions are taken and repossessed by the courts. Since there are many different chapters of bankruptcy, there are also many different takes on repaying debts, and only Chapter 7 requires a complete liquidation of assets. Even with Chapter 7, debtors are allowed exempts, or items that are necessary for living.

How To Recover Quickly From Bankruptcy. High Converting Guide To Recovering Fully From Bankruptcy And Bad Credit Rating.

One more important piece of bankruptcy information to keep in mind is that there is a new bankruptcy law in place called Bankruptcy Abuse Prevention and Consumer Protection Act. This law was implemented in 2005 to stop fraudulent bankruptcy claims and may make it more difficult to convince the courts of a claim.

Although filing for Chapter 13 and Chapter 11, or reorganization plans, have not changed that much, filing for Chapter 7 has becoming increasingly difficult. Previously, debtors were not required to take courses on debt, but with the new law in place, Chapter 7 debtors are required to take Credit Counseling and Financial management courses before the process can be completed.

Credit: Ian W Anderson of Bankruptcy 411, the bankruptcy information site. For more bankruptcy information and articles like this one visit: Bankruptcy.

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Tip! The final step in considering bankruptcy is to actually engage the services of an attorney. At this juncture, you attorney will prepare a bankruptcy petition on your behalf that will be filed in the bankruptcy court.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect in October of that year. As its name clearly implies, it was designed to make bankruptcy less attractive to filers and curb perceived abuses of the bankruptcy system.

Bankruptcy Mortgage Book. How To Qualify For A Home Mortgage After A Bankruptcy.

The fight about this law was waged by financial institutions on the one hand and consumer rights advocates on the other. Lenders felt that the bankruptcy courts were being abused and that borrowers who had the means to repay were allowed to walk away from their obligations.

This, in turn, raised the cost of credit for the rest of us, since the losses were spread among those still solvent.

Consumer advocates argued that the majority of filers were in that position because of unexpected bills - generally due to medical conditions - and that it would be a hardship to deprive consumers of their “fresh start” in order to fatten the profits of the lenders.

On the middle ground where those that felt the changes to the bankruptcy law would make little difference, since most filers fell under the median income of their home state and were so hopelessly in debt that they could never repay their bills.

The lenders won and the law, which is considered the most far reaching reform of the bankruptcy laws in 20 years, passed.

Here are highlights of the major changes likely to affect individual filers:

1. Credit counseling is required and must take place within 6 months before filing. The counselor is supposed to determine if the debtor can file for Chapter 7 & or Chapter 13. He is also supposed to set up the Chapter Thirteen repayment plan, if applicable.

2. Since the main thrust of the act was to make it more difficult for high wage earners to get a Chapter Seven Discharge, if their income exceeds their state’s median income, they are forced into a Chapter Thirteen repayment plan.

Tip! The first step in learning how to file for bankruptcy is to make a comprehensive list of all of your creditors and outstanding debts. When you are working to determine how to file for bankruptcy, you need to appreciate that if you to proceed with a bankruptcy case, you must be sure that all of your debts are disclosed and listed in a bankruptcy petition.

Once in this plan they are placed on a strict - some say draconian - budget determined by IRS regulations. They are told how much of their money is to go to debt repayment and how much they can spend on things like food and housing.

3. If the debtor ran up bills of $500 or more for “luxury goods” from a single source within 90 days of filing or borrowed $750 or more within 70 days of filing, these debts will be considered non dischargeable. If he bought a car within 2 and a half years of filing, the lien holder will keep his lien until the entire debt is repaid.

4. Debtors used to shield assets by buying homes in states with big or even unlimited “homestead” exemptions. They would, in effect prevent creditors from being able to collect on their debts, by tying all their money up in a home in one of these states. Now the debtor has to acquire the house about 3 and a quarter years before filing a bankruptcy petition. Otherwise his exemption is limited to $125,000.

Tip! Every single state in the United States has it’s very own interpretation on bankruptcy, some better than others. In some states you are permitted to hold onto your assets while other states grab hold of everything you own and require you to turn over ownership.

5. The debtor must “reaffirm” his secured debt or reveal what his intentions are regarding that debt within 45 days after the first creditors meeting. If he fails, the automatic stay is lifted and the creditor can foreclose, repossess or start a suit to collect his money. A debtor can no longer just pay the debt without reaffirming it.

6. Automatic stays will not be granted if it can be shown that the debtor has had a habit of abusing the bankruptcy system. Many used to file bankruptcy petitions merely to hold off their creditors or to buy themselves time, having no intention of following through on the bankruptcy.

Tip! Pay all of your bills on time. Bankruptcy is a means to financial recovery.

7. A Chapter 13 discharge will not be granted if the debtor obtained a Chapter 7, 11 or 12 discharge in within the 4 years prior to the date of filing or if a Chapter 13 case was filed within 2 years of the pending case.

8. More documentation must now be provided by the debtor. In addition to the list of creditors, schedules of assets and liabilities, income and expenses, debtors must also file:

A certificate of credit counseling

Evidence of payment from employers received 60 days before filing

A statement of monthly net income and any anticipated increase in income or expenses after filing

Tip! It is also a requirement, for those wishing to obtain a bankruptcy home loan, to have a debt-to-income ratio of between forty-five to fifty percentile range.

Tax returns for the most recent tax year

Tax returns filed during the case including tax returns for prior years that had not been filed when the cases began

A photo ID.

Failure to provide the documents within 45 days after the petition has been filed will result in automatic dismissal of the case. However the debtor can apply for a 45 day extension.

How To Recover Quickly From Bankruptcy. High Converting Guide To Recovering Fully From Bankruptcy And Bad Credit Rating.

9. The court will give support obligations first priority over everything but the administrative costs of a trustee.
The automatic stay does not apply to the payment of domestic support or to the enforcement of a wage garnishment. This includes obligations incurred either before or after the bankruptcy filing.

Failure to remain current on support claims is grounds for conversion of a Chapter 7 to a Chapter 13 case or complete dismissal of the petition. The debtor must be current on all his obligations in order to confirm a repayment plan and the plan must provide for priority payment of support.

9. The new law curbs the ability of the court to grant discharge of certain debts at the completion of the 5 year plan. Unpaid trust fund taxes, taxes for which returns were never filed or filed late within two years of the petition, taxes for which the debtor filed a false return in order to evade taxes, debts from fraudulent activities, debt unlisted in the petition, theft by a fiduciary, domestic support payments, student loans, damages for injuries caused by drunk driving, criminal restitution, fines, civil restitution or damages awarded for willful or malicious personal actions resulting in personal injury or death are now excepted from Chapter 13 discharge.

Tip! A bankruptcy filing remains on a Credit Report for as long as 10 years, and it also stays on Court Records for as long as 20 years. Thanks to this, your chances of getting a loan and even a job again, will be minimal.

10. The automatic stay will not prevent eviction if the debtor fails to pay his rent after the petition is filed.

11. Attorney’s can’t represent themselves as “Debt Relief Agencies”. They cannot advise the debtor to incur more debt before filing and among other things they must enter into a written contract specifying all costs and informing the debtor that a lawyer is not necessary to file bankruptcy.

12. The trustee can void all transfers made to self directed trusts within 10 years of the filing, if he can show that the transfer was made to harm or defraud a creditor.

13. Federally guaranteed student loans were never dischargeable. Now student loans owed to for-profit and nongovernmental entities are also not dischargeable.

Tip! It is true when they say that the bankruptcy laws can be rather complex. One of the most common is Chapter 7, which discharges all financial debts.

14. A Chapter 13 discharge will not be granted until the debtor takes a course in financial management as determined by the trustee.

15. The time between Chapter 7 discharges has been extended to 8 years from seven to discourage “serial” filers.

Before the law took effect, there was a rash of filings, which was expected.

But since then, after taking a brief dip, the number of bankruptcy filings is starting to climb again, which seems to indicate that maybe all has not gone as planned - which is, of course, nothing new where the government is concerned.

This article does not purport to offer legal advice, nor is it a complete summary of all changes made to the bankruptcy laws.

By: Chris Cooper. For more information on bankruptcy and credit counseling, visit http://www.credit-yourself.com/credit-counseling.html

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