Many companies offer false promises after a bankruptcy. It is important to understand how to avoid scams and plan your finances wisely.
Florida residents who have just gone through a bankruptcy may be feeling hopeful and positive about the future. After all, they have either discharged debt or restructured it in a manageable way through a Chapter 7 or Chapter 13 plan. On the other hand, it can be easy to feel overwhelmed and uncertain during the weeks and months following a bankruptcy. There are likely to be many companies offering people a new start post-bankruptcy through loans, credit repair promises and other schemes. It is important, therefore, to understand which options can be smart, and which are best avoided.
Falling for scams and false promises
According to the Federal Trade Commission, it is not uncommon for companies to contact people after a personal bankruptcy, making promises to repair poor credit and wipe the slate clean. However, these companies are highly unlikely to be legitimate and are usually scammers. It is not possible to instantly repair credit and, in fact, illegal to hide such significant financial information as a bankruptcy on one's credit report. A bankruptcy will affect a credit report for at least seven years, but this does not necessarily mean disaster. In time and with smart financial decisions, the negative points on a credit report will begin to drop off.
Planning finances unwisely
It can be easy to fall back into old habits after a bankruptcy discharge. This is one of the most damaging ways to keep poor credit and to make one's financial situation worse. It is imperative to pay bills on time after bankruptcy. Large purchases should also be planned out and purchased when they can be afforded, rather than as an impulse decision.
Building credit the wrong way
Many people believe the myth that it is bad to get credit after a bankruptcy. In fact, states Bankrate, numerous reputable lenders understand that responsible lending can help positively affect a person's financial standing.
Not developing new, smart financial habits
Finally, the fresh start that a bankruptcy is meant to give people will not work in the long term if they are not willing or able to develop positive habits that last a lifetime. While a line of credit used wisely can improve one's credit score, opening up multiple credit cards and keeping them maxed out is likely to be disastrous. After a bankruptcy, it is more important than ever to avoid making the same choices that might have contributed to the initial financial problems. It might help at this time to consult a financial planner to get started on the right track.
Bankruptcy may be a useful tool in turning your financial life around. The choices you make during this time can make all the difference. An experienced bankruptcy attorney in Orlando should be able to advise you of your options.