Yesterday, we talked about the official court costs of filing for personal bankruptcy, which are quite low.  Today, we’ll cover other, often unexpected costs of bankruptcy.  Here are more general court-related costs:

• Attorney fees
• Credit Counseling Fees
• Petition Fees
• Amendment Fees
• Reopening Fees
• Cost of converting from Ch. 13 to Ch. 7

Other long-term costs include:

• Higher interest rates on home loans
• Higher insurance rates

If you can possibly work your way out of debt through credit counseling, do so.  Bankruptcy is a huge event in anyone’s life, and fraught with frustrating situations.  If bankruptcy is your only option, know that, with a little work, you can rebuild your credit afterwords.

One way to rebuild credit after a bankruptcy is to make a major purchase, such as a car loan.  If the credit agencies see you’ve been carefully, dutifully paying your car loan payments on time every month, they’re likely to think better of you, and maybe even raise your credit score.  If you’re looking for an auto dealer that specializes in helping Bankruptcy Survivors, Bankruptcy Resource Group (BRG) can help. BRG maintains a nationwide network of such auto dealers.  Visit the Bankruptcy Resource Group homepage to learn more.

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Bankruptcy Survivor has been reporting on increased bankruptcy rates across the United States, especially in California and our home state, Oregon. But the financial worries are not limited to these United States.  Many of our neighbors to the north are also struggling to stay on top of bills.  According to Canada’s Globe and Mail, 8,000 Canadians filed for personal bankruptcy in January of this year, a 21.7% increase from the same time last year.  

Credit Canada, a non-profit organization dedicated to helping people in extreme financial difficulty, reports a 40% increase in phone calls from consumers seeking aid.  

In other words, many Canucks are in dire need of help.  Many of them are turning to bankruptcy for a second chance.  As I was raised Catholic, I found it especially amusing that Globe and Mail writer Sarah Hampson compared personal bankruptcy to Easter.  She writes, “Personal bankruptcy is like Easter, if you listen to those who might sell you on its merits. It’s an unfortunate financial death, followed by Resurrection.”

If you’re a Bankruptcy Survivor yourself, you’ve probably already spent nights wondering who should take the blame for personal bankruptcy.  In these times of economic crisis, some would blame bankrupt consumers for foolishly taking out more credit than they could afford.

Others, like Margaret Johnson, the president of Solutions Credit Counselling Service in BC, say the credit industry is to blame.  Ms. Johnson said, ”The credit industry holds the key to this. They could slow or stop the bankruptcies by being easier to get along with.  In cases that threaten personal bankruptcy, Ms. Johnson wonders why the credit agencies don’t do more to help overstretched customers.  ”Why not reduce the interest or forgive the interest or whatever we need to do to get this person back on their feet and retain them as a customer instead of throwing them to the wolves?”  she says.

Furthermore, many consumers were uninformed when they signed up for easy credit cards.  Too many credit companies glossed over details like booming interest rates down the line.  

What are your thoughts on this?  Who should take the blame for the current glut of bankruptcies?

If you’re through a bankruptcy, and looking for ways to rebuild your credit, give Bankruptcy Resource Group a call.  They maintain a nationwide network of car dealers who specialize in providing credit to post-bankruptcy consumers.  Making regular (or even early!) car payments is a great way to rebuild your credit after a bankruptcy.

Top photo by Howard Gees.

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The economy’s crash is being felt differently in different parts of the country.  Here in Oregon, we’re steadying ourselves for a second round of foreclosures from homeowners who took out “Alt A” type mortgages, which threaten ballooning payments as the mortgage ages.   Still, Oregon’s situation seems less dire compared to other states– like California.

Many California residents are filing for bankruptcy after struggling to make ends meet. The Modesto Bee recently reported that bankruptcy filings have increased 83% since 2007 in and around the Central Valley cities of Fresno, Modesto, and Sacramento. In part, California’s 89% increase in jobless claims has fueled the rise in bankruptcies.

Other factors often contribute to bankruptcies, as the editorial staff of the Modesto Bee recently noted: “The downward spiral often begins with residents becoming overextended on credit card debt, then breadwinners lose their jobs and mortgage payments mount and foreclosure begins. Once that occurs, many residents see bankruptcy as their only way out.”

Fortunately, after the hassle of bankruptcy is over, it is possible to rebuild credit.  Here’s hoping all of California’s recent bankruptcy filers will become strong, vibrant Bankruptcy Survivors, who have seen the other side of bankruptcy and carefully rebuilt their credit scores.  One way to improve your credit score after a bankruptcy is to take out a new car loan.  If this solution appeals to you, give Bankruptcy Resource Group a call.  BRG maintains a nationwide network of auto dealers who specialize in lending to Bankruptcy Survivors like you.

Top photo by Woodley Wonderworks.

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