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According to Debt.org, roughly eight percent of those who file for bankruptcy are repeat filers who are responsible for 16 percent of all bankruptcy cases. We don’t see a lot of repeat clients in our office, but it does happen occasionally. Truly, any ethical bankruptcy lawyer doesn’t want repeat business. We prefer that you take full advantage of the fresh start that bankruptcy offers and move on to a future where you are financially stable and have no further credit problems.
Here are four mistakes that can happen after bankruptcy that can sabotage your financial future that you should do everything possible to avoid:
1) Falling Back into the Credit Trap
After bankruptcy, naturally you’ll want to rebuild your credit but there will be many credit card companies ready to take advantage. You’ll be deluged with high interest rate card offers and may be so desperate to have a card back in your wallet that you may jump at one of these ill-advised offers. Whatever you do - avoid this trap! Read the fine print on all offers and trash any invites that are obvious bad deals and wait for something better to come along. If you absolutely must have a card, start with a secured card. And once you have a credit card, don't carry a balance over to the next month. Pay it off in full each month and you’ll never be in trouble again!
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2) Lack of Financial Planning
It’s simple mathematics, but some people just don’t get it. When your expenses outpace your earnings, you wind up in debt. You shouldn’t be debt spending by financing things you can’t afford. Debt spending is unwise except for a mortgage or car loan – and only if you can afford the payments and still pay your living expenses and set aside a portion of your earnings for savings. The best approach is to plan what you spend and don’t spend more than you plan and that means creating a budget. You can read more about budgeting in this recent blog!
3) Falling for Credit Repair Scams
If you’re deep in debt and skipping payments prior to filing bankruptcy, your credit rating will have some dings on it. And bankruptcy itself lowers your score. You may be tempted to take a shortcut to try and improve your credit score. Scammers run ads promising to help create a new identity or to remove bankruptcies, liens and other negative items from your credit report for ridiculously high fees. But you can't make these items disappear - any accurate items on your report will just have to age off of the report. You’ll be out money and won’t get a better score. Don’t waste your time!
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4) Not Monitoring Your Credit Reports
Your credit rating may have taken a beating if you let late and skipped payments accrue before you filed bankruptcy relief. You may have been lackadaisical about checking your report prior to bankruptcy because you knew it would be bad news. But after bankruptcy, you should be vigilant about checking your credit report. Some of your creditors may not properly report your bankruptcy information and your account may appear to still have a balance or be in collections. Be sure to check all three credit reporting agencies!
To get the most from your bankruptcy, you'll want to avoid these critical missteps and consult a reputable North Carolina bankruptcy attorney about your circumstances. If you’re considering filing bankruptcy to deal with your debts, contact the law offices of John T Orcutt – North Carolina bankruptcy expert – for a free consultation today!