Bankruptcy may seem the solution to your financial problems, but while it may discharge a debt, you have to consider what impact it has on your life besides debt relief. Here is what you can expect to happen after bankruptcy.
A Fresh Start
There are different types of bankruptcy included in the bankruptcy code. No matter what bankruptcy chapter you file under, the successful end is the bankruptcy court issuing a discharge that will wipe out your qualifying debts. This means that your creditors can no longer go after you by means of a lawsuit, wage garnishment, bank levy, or any other debt collection effort. You can start afresh.
Nonetheless, you may expect a creditor or two to persist on collecting on a dischargeable debt that has already been forgiven. If this ever happens, refer to your bankruptcy paperwork, and supply creditors or collection agencies with your bankruptcy information. The details to take note of are the bankruptcy case number, the date of filing, and the date of the bankruptcy discharge. This should halt any attempt to collect from you, but if it continues, get your bankruptcy attorney to deal with the situation.
Understandably, there will be a mar on your credit after bankruptcy, and this could considerably affect your finances. Your credit report will make it a rather uphill battle to convince creditors, insurance companies, employers, and landlords to trust you enough to take a chance on you.
The silver lining in the situation is that although bankruptcy filings will stay on your credit report for up to a decade, time will soften the blow on your credit score. Your score might decrease, but not necessarily, and things can be expected to look up.
- Upon receiving your discharge, you can expect credit card companies to start offering credit again.
- A year or two later, you might already be eligible for a car loan.
- In about two years, the odds of you being able to rent or lease a house from an apartment complex or any professionally-managed residential property will improve. In the interim, you can pursue a cosigner agreement or a private party rental.
- Within four years of going bankrupt, a debtor usually already qualifies for a mortgage loan. You might be able to buy a house on credit sooner if a foreclosure didn’t figure in your bankruptcy or if your financial distress stemmed from an unfortunate circumstance that you couldn’t have avoided, such as undue hardship following a divorce or an illness.
You need to factor in, of course, how you handle your finances after your bankruptcy in boosting your creditworthiness. This means that it will definitely be to your credit to responsibly apply whatever financial management or debt management lesson you learned from your session with a credit counselor, your education course, as well as your entire experience with consumer bankruptcy.
Rebuilding Finances Post-Bankruptcy
After bankruptcy, you can expect to have fewer financial obligations. You can take advantage of this status by staying out of debt. Use this opportunity to maintain good credit by applying the financial savvy you acquired through experience. Make sure you budget efficiently and effectively. Include funds for emergencies such as unexpected car and house repairs as well as medical bills.
Saving is also a necessary tool. Pad your retirement accounts. You can do so by maximizing contributions to your 401k and 403b. Pay more attention to your financial future, and regularly check your credit report. Your credit history may include a bankruptcy petition, but continuing a debt-free status will bear more weight as time goes on. Former debtors can eventually improve their credit rating.
An Arizona Bankruptcy Attorney Can Help
If you need to file for bankruptcy, it’s important to have a good idea just how it will affect your life for years to come. Look beyond bankruptcy protection and enjoying the automatic stay, beyond debt settlement and completing the payment plan. That’s why bankruptcy consultation is a prudent first step to take before you even start the actual bankruptcy process. For legal advice, call us at Phoenix Fresh Start Bankruptcy Attorneys and talk to one of our experienced bankruptcy lawyers.