Jonathan Frutkin Bankruptcy Law Blog on Lawyers.com

Bankruptcy is often viewed as an option of last resort for people and businesses. While it is true that the consequences of bankruptcy can be far-reaching, it should be viewed as a solution rather than a problem. Bankruptcy offers you protection from creditors and a chance to restore your finances. With this opportunity comes significant personal responsibility.

The actions that you should take after bankruptcy depend in part on the type of bankruptcy filed. In Chapter 7, the consequences are quite clear: all of your non-exempt assets will be liquidated and the proceeds from sales will be automatically distributed to creditors by a court-appointed trustee. For Chapter 11 and Chapter 13, businesses and individuals will be expected to formulate realistic plans for repaying debt over a designated time period. Thus, if you have filed for Chapter 11 or Chapter 13, you have a great responsibility to pay back debts according to the established schedule or you will risk losing protection privileges from creditors. Similarly, if you are still in possession of your house and have mortgage payments, you must make those payments on time or the bank (or mortgage-owner) may seek foreclosure.

As a requirement for filing bankruptcy in Arizona, you will also have to enroll in a debtor education course approved by the U.S. Trustee program.

The truth is that your credit score will be negatively impacted by bankruptcy, at least in the short-term. Also, your bankruptcy will remain on your credit record for up to ten years. Nevertheless, bankruptcy could be a first step on the road to restoring your credit history if you demonstrate that you know how to manage your finances:

• Open a savings account: learn to save money from earned income, regardless of how small the amount
• Take out a small loan: after you have accumulated some savings, take out a loan that can be covered by those savings and pay it back; this will help improve your credit score. Do not take out a loan if you cannot pay it back with your savings.
• Continue to make payments, on schedule, as specified in your Chapter 11 or Chapter 13 plan.

The success of bankruptcy will depend on the steps that you take—your discipline and determination—after the bankruptcy is filed. If you have questions about how to proceed after bankruptcy, contact an experienced bankruptcy attorney.

This information provided by the Phoenix bankruptcy attorneys of:
The Frutkin Law Firm
Two Renaissance Square,
Suite 1400
40 North Central Avenue
Phoenix, AZ 85004
602-639-4610