Most people are suprised to find their mailboxes flooded with new credit offers after filing bankruptcy. Why does this happen? Why would a creditor give more credit to someone who has filed bankruptcy?

Creditors make money by lending money. If creditors don't lend money, they don't make money. Even credit cards for people with the best credit ratings often carry credit card balances that will not be paid off within the next 20 years if the debtor pays the minimum monthly credit card payment.

Creditors lend money based upon a debtor's debt to income ratio. Debt to income ratio is the amount of debt a debtor has versus the amount of money the debtor earns. If a debtor has monthly debt that exceeds the debtor's monthly income, the debtor is obviously a poor credit risk and it is unlikely that a creditor will risk loaning money to the debtor.

What happens to a debtor's debt to income ratio when the debtor files bankruptcy? The bankruptcy will wipe out the debtor's debt and leave the debtor with the same income. Filing bankruptcy transforms the debtor's debt to income ratio and creates a positive lending prospect for the creditor.

Creditors also know that the debtor who has filed a chapter 7 bankruptcy will not be able to file another chapter 7 bankruptcy for 8 more years under the new bankruptcy law. Creditors know that the debtor who has filed bankruptcy is stuck with whatever new credit is issued and will not be able to discharge the debt as easily in a second bankruptcy.

Filing bankruptcy can actually improve the credit outlook for many debtors. Most bankruptcy lawyers offer free consultations to discuss bankruptcy and credit issues.
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BankruptcyHelpOnline.org is the bankruptcy resource solution that makes bankruptcy easy to understand. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has made filing bankruptcy more complicated than ever before. BankruptcyHelpOnline.org is your source for useful bankruptcy information that is easy to understand.

A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Bankruptcy... A Note About Personal Bankruptcy Sometimes, the formal and legal declaration of personal bankruptcy is the best way to go when you're "snowed under" with bills, and you just can't see your way clear to survive. Actually, bankruptcy allows you to make a fresh start. Generally, it takes only a small amount of money, a careful evaluation of your assets and your liabilities. In many cases, a lawyer is not necessary. If you have very few assets, mountains of debt, and not enough income to meet your obligations, then your best bet is almost always the filing of straight bankruptcy. What you'll need is the proper forms "S3010 Bankruptcy forms, for an Individual Not Engaged In Business." These can be purchased from any full-line office supply store, especially in an area serving attorneys' offices. You'll need to know which district you live in for Federal Court purposes - so look in the white pages of your telephone book under U.S. Government - Courts - and take down the address of the nearest U.S. District...

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