David R. Black Bankruptcy Law Blog on Lawyers.com

Personal bankruptcy filings reached 1.5 million in 2010, the highest level since the Bankruptcy Abuse Prevention and Consumer Protection Act was passed by Congress in 2005.  Lots of financial stresses and setbacks push people into bankruptcy, including job loss, severe illness, or home foreclosure.

 While the very word bankruptcy inspires a sense of shame in some who file, it should not.  Bankruptcy wipes the slate clean and gives people a fresh new start. 

 View bankruptcy as a valuable opportunity

The reality is that bankrupt individuals actually appear to be more credit worthy than people who are still drowning in debt.   Why would this be?  Bankruptcy improves credit scores by discharging debts.  And since debtors who filed for Chapter 7 bankruptcy may not file again for eight years, this puts creditors at ease when considering applications for new loans or credit lines. 

 People can and do recover from bankruptcy.  The best advice falls into three categories: Get your financial house in order, repair your credit, and build a safety net for the future.

 So, the first step is to really come to terms with what behaviors or circumstances drove you into bankruptcy to see what changes need to be made.   Develop an honest budget that includes income, fixed expenses, and variable expenses.  Then be realistic about what your disposable income really is and use credit wisely.  

 Next, you need to repair your credit.  Make sure bills are paid on time, especially those for secured debt.  Get two credit cards and use up to 30-percent of their available credit limits.  Pay the balances off in full each month to improve your credit scores.  If you do not qualify for a credit card, apply for a secured credit card where you deposit money into an account and then charge purchases against those funds. 

 Lastly, build a safety net for the future.  This means saving money for emergencies, retirement, and big-ticket items you want to buy.   Evaluate the amount of insurance you have for your home, life, and health, among other types.  Insurance benefits can cover unforeseen expenses, and even the death of the family breadwinner, which can forestall another bankruptcy.

 If you live in Chester or Delaware Counties in Pennsylvania, you should consult a qualified Chester County bankruptcy lawyer to see if bankruptcy is right for you, and guidance throughout the filing process.

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David R. Black, Esq.