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Credit Repair After Bankruptcy
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Business Bankruptcy
Business bankruptcy is a situation wherein a business organization has more liabilities than assets and is no longer capable of meeting its financial obligations. Any type of business can file a business bankruptcy case.
It's best to try to realizing the conditions for bankruptcy, what kinds of debts bankruptcy won't be able to discharge, as well as the long term effects it can have on ... Read bankruptcy article
New Bankruptcy Law
The new bankruptcy law took effect recently and significantly changed the rules of filing bankruptcy. If you're not sure exactly what these changes mean for you, read this article which lays out the basics of the new bankruptcy law.
The new bankruptcy law has brought about a number of changes to the filing process. Here are the major ones:
Credit Counseling The new bankruptcy... Read bankruptcy article
Credit Repair After Bankruptcy
Even though slow and difficult, it is very possible to experience credit repair after bankruptcy. It is not out of your reach, regardless of what you may think. Immediately after filing for bankruptcy you can begin repairing your credit, all you need is some planning and a little thought.
The first thing you should do is try to obtain a credit card or a small loan. Now you are probably thinking this is counterproductive. However, it is a vital issue because you are trying to improve your credit and repair your credit after a bankruptcy. By obtaining a credit card or small loan and keeping it paid every month and on time, as well as keeping within the spending limit, you will slowly begin to repair your credit.
Another possibility and really helps in credit repair after a bankruptcy, is how long you have worked with your employer. Many creditors take a look at the amount of time you have spent with your employer. The longer you maintain your job, the better off you are, because you have stability within your financial affairs.
If you constantly change jobs, this will make any creditor uncomfortable and be less willing to extend you credit for credit cards or loans. This creates the feeling of an unstable income, therefore, it is important to find a good job and keeping it when trying credit repair after bankruptcy.
You should have three major goals when you are trying credit repair:
1. Make a commitment to always pay your bills on time. This also means you should be paying, in full, the balance on your credit cards monthly.
2. Try to get a savings account and build it. This gives you extra cushion if hard times come your way.
3. Create and stick to a manageable budget. If you need ideas and tips about creating a budget, the Internet can help you.
Ken Charnley is a personal finance publisher whose website Bankruptcy Loans is dedicated to quality information on Bankruptcy faqs & Loans. For all your Bankruptcy faqs needs visit and Apply for Bankruptcy Loans Online
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Bad Debt or Bankruptcy
If you were doing the logical thing and sunning yourself on holiday at the start of August 2006 you may have missed some pretty scary news about personal debt in the UK.
As if from nowhere, a flurry of announcements arrived in the space of a few days.
The Bank of England raised interest rates for the first time in two years, making debts just that little bit harder to service in the coming months.
The DTI reported that IVAs (Individual Voluntary Arrangements) went up to 23,000 in the first quarter of 2006. That is a 73% increase over quarter one 2005. If you thought that sounded bad, the second quarter saw 26,000, a 66% rise.
HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland all reported rises in impairment charges or provision against bad debts in the first half of 2006. To pick just one, Lloyds TSB set aside ?632 million in the first half of 2006, that is a 16% increase.
Going back to June, it was announced that UK mortgage debt passed the ?1 trillion mark and in May the debt counseling charity Citizens Advice issued a report explaining that the average person they help would need 77 years to repay their debts! Having just checked on a government website, I found that girls and boys born in 2002 have a life expectancy of 81 and 76 respectively.
Does this qualify as a serious problem?
If you are still unsure, consider this. In early 2006, the Office of Fair Trading told many credit card firms to cut their average default fees. As you may be aware, default fees can be pretty high and are a great source of revenue for the card firms. Losing this revenue was not part of the card companies plan, so they have been looking for ways to recover that lost income. Many have chosen to increase their interest rates. This will of course, impact many credit card borrowers and hasten the collapse of some families finances.
To help me with a little research, I logged on to a forum for people with debt problems in the UK. Rather amazingly, it appeared that the flavour of the month is to be declared a bankrupt. When I suggested the obvious (spending less and trying to earn more) I was abused with a torrent of angry posts for being 'unrealistic'.
No matter how hard I try, I cannot seem to get away from the logic that if a person gets into debt by continually spending more than they earn, doing the exact opposite will (sooner or later) help them to escape these debts. Think of it as a financial diet.
An IVA is essentially a voluntary bankruptcy for an individual. Rather than being forced into bankruptcy by a lender who is chasing the individual for repayment, the individual can 'opt out' as it were. Once the IVA has been declared, the lenders are no longer allowed to chase these debts. The rules are obviously far more complex than this, I am just trying to offer a flavour.
If you are anything like me, you probably think of bankruptcy as something that happens to entrepreneurs who borrowed millions to expand a business. It seems however, that now, any debts above ?15,000 might be worth 'opting out' of. Amazing.
In 2004 The Enterprise Act changed the rules relating to bankruptcy. It is now possible to be discharged in just one year rather than three. In other words, my new forum 'buddies' seem to feel that bankruptcy is the least worst option. It seems that the act of repaying debts is now less appealing than bankruptcy!
I can't deny that I have an issue with this. Someone, somewhere will need to make good on those bad debts. Right now, it seems as though the responsibility will fall to shareholders in the major high street lenders. As a small shareholder myself, I'm not sure I am too happy with this outcome. I had always been of the opinion that someone else paying my debts was 'unrealistsic'.
Whatever the outcome, I fear that the crest of this particular wave is still in the distance.
Stuart Langridge is an experienced international financial adviser and writer. For more information about debt related topics, please go to: http://debt-swicki.eurekster.com/
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