Financial Vulnerability: Bankruptcy Pitfalls to Avoid
When your financial crisis has come to a head and your only option is bankruptcy, you’re at a pretty vulnerable point. There will be alluring ideas waiting on you, as well as some less than respectable people waiting to take advantage of the state you are in. This does not mean you should steer clear of filing bankruptcy if it is going to make your life a lot better, nor does it mean you should avoid businesses and services who are there to help you. You simply need to be aware and be on the lookout for things that could lead to further financial trouble and to avoid things that could easily lead to your being taken advantage of.
Credit Counselors
Credit counseling is a wise idea if you find yourself in a bad way financially. For those who are filing bankruptcy, it is often a requirement of the court that you go through a credit counseling program and receive your certification. Credit counseling can teach you how to budget, how to manage your bills and finances, they can negotiate some of your bills for smaller settlements and can give you a lot of tools for a healthy financial future. Even people who are not in financial trouble could benefit from such services. Unfortunately, not all of these services are reputable, having less than your best interest in mind. If you need to go through one of these programs, ask if your state or county offers a free program. If not, ask for a recommendation from the court or someone who knows all about it. Do not trust advertising and be one the lookout for those who want a bunch of money up front. Some of the most unscrupulous companies will gladly take your money while failing to deliver what they have promised.
Watch out for credit repair offers as well. Accurate information can not be removed, even if it is negative. If something is old and needs updated, or is inaccurate, you can call the credit bureaus yourself to see that this is taken care of.
Risky Financing
Once a bankruptcy is discharged, you might think that offers for financing and refinancing would be slow or non-existent. The truth is, a lot of these offers will start coming out of the woodwork once your bankruptcy is behind you, even if it is still on your credit report. Why? because the lenders making the offer operate on the assumption, whether true or false, that because you filed for bankruptcy, you are less likely to get into financial trouble again. It is not real smart on their part, as some people do file for bankruptcy numerous times. Some are irresponsible and others, well, life happens.
Some of the offers you might see are refinancing options for mortgages, loans and even credit card offers. It is not a bad idea to take a lender up on an offer. Sometimes, it can help to rebuild your credit. However, you will want to pay close attention to the terms and conditions, as well as the rates you will be expected to pay. You will want to weigh this against your financial ability and will want to ensure that you are responsible with paying the bill each and every time it is due.
Once you have filed bankruptcy and had a favorable decision, you just want to be careful. Work to get your financial health back on track and be wary of things that could lead you right back into bankruptcy court.
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