Credit Counseling

Upon successful completion of a bankruptcy proceeding in Arizona, you will be granted a new start. You can go about your days enjoying the feeling of being free of debt and rebuilding your finances. However, there are some issues you should be prepared for and the Phoenix bankruptcy lawyers at Bankruptcy Law Network can help.

Credit Changes

Credit standing is one of the most interesting parts of filing for bankruptcy. While in the long run you are potentially able to enjoy renewed credit and higher scores, initially your credit will be very affected by the filing. Be prepared to be seen as more of a risk when applying for loans or rentals for a while, but know that the situation is only temporary.

The bankruptcy will be entirely eliminated from your credit in seven to ten years, but you can being rebuilding your credit right away. The best way to do this varies widely, so it may be a good idea to seek out credit counseling when embarking on the path to great credit. Credit counselors will assess your finances and give you advice on how to make your spending and investments work hardest to establish a high credit score.

A Different Outlook on Spending

If you have filed for any sort of bankruptcy, it is a good idea to take serious stock of your spending habits – especially under Chapter 13 bankruptcy. Under Chapter 13, you will be required to make court-mandated payments to eliminate your debts over the course of three to five years. This may mean you will need to minimize your overall spending and efficiently manage costs to allow enough resources to make your payments.

If you filed for Chapter 7 bankruptcy in Arizona, there will be no payment plan, and you will walk out of the process with no debt; however, credit cards will no longer be available, so you will need to learn to work using cash as your sole source of payment. This will mean enhanced budgeting and possibly less wiggle room until your credit recovers. An experienced Phoenix bankruptcy lawyer can help you understand the differences between filing for either Chapter 7 or Chapter 13 and the consequences each has on your finances moving forward.

Planning Your Financial Future

After a bankruptcy, it is a good idea to begin working immediately to rebuild your financial standing. There are multiple ways this can be accomplished, and most of them are relatively simple. One way is to demonstrate you have moved past your previous financial mistakes. Be sure to make all payments on time, do not accrue additional debt, and begin a savings fund for unanticipated costs.

A bankruptcy can be a financial challenge, but it is by no means insurmountable. Lenders and credit card companies will begin to see you as a good investment if your post-bankruptcy behavior has been pristine. Lenders are only human, and a bankruptcy is far from an unforgivable offense if you take steps to continually improve your financial state.

Potential Unforeseen Effects

There are some side effects you may not anticipate when emerging from bankruptcy in Arizona, but it is a good idea to be prepared for them by speaking with a knowledgeable Phoenix bankruptcy lawyer, just in case they occur. Among these are:

  • Increased insurance. Since your credit score touches many areas of your daily life, it is possible that filing for bankruptcy could impact your insurance.

  • Forcible slimming of expenses. Certain “luxury” costs could be seen by the courts as frivolous – such as sending your children to private school – and a mandatory cessation order may be imposed on them.

  • Workplace awareness. If paying your debts through a Chapter 13 wage removal program, it is possible that someone in your office may become aware of your bankruptcy status.

Your Home as Collateral

One way to avoid these side issues is to list your reason for bankruptcy on your credit report. If the reason is compelling, such as an illness or unavoidable professional failing, it may be received with more leniency going forward. As Phoenix bankruptcy attorneys, we understand the effects of filing for bankruptcy, so contact us if you have questions about how to avoid these issues.