For some Tennessee readers, bankruptcy might seem like a personal failure. However, bankruptcy is becoming more and more common. In July, the number of bankruptcies in the United States had exceeded 87,000. In fact, bankruptcy provides many debtors with the fresh start they need to move forward financially. And even after the bankruptcy process is complete, there are steps debtors can take to successfully manage their finances in the future.
One good step for debtors is to find out what caused the bankruptcy and set a budget or some other plan to prevent such situations from reoccurring. It's also a good idea to set some goals. These can include paying off debts or taking steps to rebuild credit. Remember, good credit won't happen overnight, but by using two credit cards and paying them off monthly, a person's credit can dramatically improve in less than 10 years.
Most importantly, think positively. Although obtaining credit after a personal bankruptcy can be difficult, it's not impossible. There are many lenders willing to give people with less-than-stellar credit histories a second chance. Also, working with a professional, such as a credit counselor or attorney, can help with the recovery process. Many offer services to help with debt and finances.
For debtors considering bankruptcy, a professional can help them determine whether filing for Chapter 7 or a Chapter 13 bankruptcy is the best choice for them. A Chapter 7 bankruptcy can usually be resolved within a matter of months, while a Chapter 13 bankruptcy will allow the debtor to set up a court-ordered payment plan to address their debts. Ultimately, bankruptcy is a good way for people facing overwhelming debt to regain control of their financial situations.
Source: U.S. News & World Report, "A Roadmap Out of Bankruptcy