Coping with Creditors and Collection Agencies After Filing Bankruptcy

Choosing to file for bankruptcy is an enormous decision. Obviously, bankruptcy can assist you to have a new lease on your financial future, but it could also wreck havoc on your credit report. Hence, it can make it very challenging to obtain credit lines after your bankruptcy filing.

But, if you feel bogged down in working with creditors it may be the best choice. Chances are if you are filing for bankruptcy you have been receiving letters and phone calls from creditors reminding you that you owe their clients money.

When you finally seek bankruptcy relief and have given over the names and addresses of your loan providers to the bankruptcy attorney, you don’t need any kind of long drawn-out facts for the credit card companies or collection agency representatives. The bankruptcy lawyer can take care of everything after you file.

In many instances, even before the documents are filed and your credit card companies have gotten notification, you can simply tell the creditor on the phone about your bankruptcy proceedings.

You can offer them the name and phone number of your legal professional, but you do not need to answer other questions they could have. Actually, if you've retained an individual bankruptcy attorney, it is their job to deal with these items for you.

Understand that many collectors have obtained unpaid debts from your lenders and may tell you a number of stories in order to collect something from you. Because they now own your debt, if they cannot collect, they lose money.

It is likely they have purchased the debt for about half of what you borrowed from and may well make you a deal to settle the debt for less than you earlier owed and if they are successful, you'll have that debt stripped away from personal bankruptcy, but that is ordinarily not to your advantage.

Keep in mind you are declaring bankruptcy because you can’t settle the debts and unsecured debts will likely be written off along the way. Your best bet is to simply and pleasantly tell them about the individual bankruptcy and offer the name and number of your legal professional before swiftly ending the discussion.

Its also wise to keep tabs on your contacts with your debt collectors just in case they continue to call you right after being informed of your imminent personal bankruptcy. After they have this info, they should stop calling.

However, if they continue, it is usually considered harassment, which can be against the law. Consequently, you'll want to chat with your legal professional if your creditors continue to call you even when they have your lawyer's information for contact purposes.

Is a Short Sale Better Than a Foreclosure for My Bankruptcy?

This is a common question among those facing bankruptcy, especially bankruptcy brought on by falling behind on mortgage payments. So what's the right answer?

When dealing with the bank that you have to pay your mortgage to, if you opt for a short sale and they agree, this allows you to sell the house for a value lesser than what you initially paid. If the bank accepts this agreement with you, you will no longer be held responsible for any more mortgage payments on the home (as it is no longer yours as of the date it is sold to the new owner.)

This allows you some breathing room, and while you will no longer own the home, you will have the money that you would have had to use to pay the mortgage to pay for other outstanding bills and/or for rent elsewhere.

The disadvantage is that it's pretty much up to you to find a new buyer for the home, and the bank that you have the loan with will have to agree on the new price of the home. If you're not quite sure what the bank will go for in terms of the price of the home, it can be an uphill battle. That said, most banks will work with you to some degree because getting a mortgage of some kind from someone is better than having the home go into foreclosure, which leaves it up to them to price and sell themselves.

Make sure that you discuss all of your options with your bankruptcy attorney -- short sales are not always the best answer for every consumer, especially given the state that the home is located in. It's always best to know which option best suits you and your chances at a better financial future.