100 Tips for 2011 » 10 bankruptcy moves in 2011
There has been a steady stream of bankruptcy filings during the economic downturn, and we can realistically expect 2011 to be no different. Look for another 1.5 million people to file for bankruptcy in 2011.
Since the mortgage crisis began in 2007, the number of people filing for bankruptcy protection has started to approach the total number before bankruptcy laws changed in 2005.
If you are contemplating bankruptcy, you can also plan for life after bankruptcy even before you even decide to file. That is not to say you ought to plan a bankruptcy filing, but you can plan to have good credit again in the event you do file.
Here are 10 things to think about when you're considering bankruptcy.
Create your story
Close to 90 percent of bankruptcies
occur for one of three reasons: illness, divorce or loss of employment. When a bankruptcy does occur, future employers and lenders will want to know why you had to file. You want to have a clear and concise explanation of the reason you filed. Don't show shame or remorse. Just accept that this difficult event has occurred, take responsibility and take steps to recover.
Review your credit score after filing
As a client once said after filing, "my score can only go up." You once had a good credit score
and you will have a good score again. Just take that current credit score number and put it somewhere as a reminder of where you once were -- and where you are not going to be again.
Review your credit report
You will want to clean up items on your credit report
that legally can be removed or revised. Correcting personal information is the first way to show potential employers and future lenders that you are taking life after bankruptcy seriously. Information like previous addresses and employment information must be accurate and current.
Show creditors "discharged in bankruptcy"
This is the first and essential step toward recovery
. You do not want any post-filing, negative history showing up on your credit report. For example, you might have voluntarily turned in a car as part of your bankruptcy. You must make sure that the creditor does not show continuous late payments after the vehicle has been surrendered.
Know when debts can be removed
Each debt is a negative item on your credit report that can be removed eventually. You need to know when that date will arrive. Each type of account has a length of time it will be on your credit report. It might only be for a few years. For example, a credit card or personal loan account will stay on your report for seven years from the date of last payment or last use of that account.
But you want to set up dates on a calendar to know exactly when a negative mark is ready to be wiped off your record. That's when the positive marks start to stand out and start to help your credit score. The further you get from the original date of the negative mark, the less impact it has on your credit score.