There is a common misconception that people only need to file for bankruptcy because they have been irresponsible with their money. However, this is not always the case, and there are a variety of things that can force a person to seek this type of protection. You may not be familiar with this type of legal protection, and as a result, you may benefit from learning the following answers to common bankruptcy law questions.
What Is An Example Of Fraudulent Debt?
While bankruptcy can be an excellent way of getting a second chance with your finances, it is important to note that there are some debts you will be unable to discharge, and fraudulent debts are an example of these. This type of debt is essentially any debt that you accrued with no intention of repaying. In addition to being highly unethical, this type of activity can have profound impacts on your ability to file for bankruptcy, and it is important for you to avoid making this mistake.
An example of this type of debt would be someone running up their credit card balances because they are anticipating filing for bankruptcy. The courts will thoroughly review your financial history during this procedure, and if this type of activity is discovered, the fraudulent debt will not be discharged and your ability to file for this protection may be compromised.
What Should You Do To Rebuild Your Credit Following A Bankruptcy Filing?
Some of the more common questions that clients filing for bankruptcy will want to have addressed relate to rebuilding their credit histories following this type of filing. While some people assume that it will be impossible to rebuild their credit following a bankruptcy filing, this is far from being correct.
Outside of paying your bills on time, you should consider applying for a secured credit card. This is a credit card backed by a deposit or some other form of collateral that you can use. By paying off this balance each month, you will gradually build positive credit, which can further help you to get the fresh financial start that you deserve.
Filing for bankruptcy protection can be an excellent way for you to relieve yourself from crushing debts and aggressive collectors. By understanding how to avoid fraudulent debt and the steps you can take to rebuild your credit history following a bankruptcy, you will be in a better position to understand the process of filing for this protection.