Many people never take advantage of the debt relief and asset protection that bankruptcy provides for fear of the aftermath. There are many myths about bankruptcy that keep most people from seeking help when they need it the most. The truth is bankruptcy can be a great tool for debt resolution when you are experiencing a financial hardship.
Knowing What To Expect
The obvious truth is that your credit will be damaged after completing bankruptcy. However, the bulk of this damage is done prior to a bankruptcy when your accounts become delinquent. You may also be in an awkward position with certain lenders. If your debts were discharged through Chapter 7, some lenders may not view you as their star borrower. Fortunately, bankruptcy gives you the opportunity to begin rebuilding your account with a lender right away. If your debts were eliminated through Chapter 13 bankruptcy, you will have repaid your debts to the creditors, leaving you in a fairly favorable position.
You will still be liable for debts that were not discharged in your bankruptcy, and don’t be surprised if creditors contact you to discuss your account. Your bankruptcy filing will become part of public record, but is rarely seen by the common citizen. You won’t have to worry about friends and family finding out about your bankruptcy unless you tell them. This information becomes public primarily for the benefit of creditors.
The Game Plan
Now that you are debt free you are in a unique position to begin repairing your credit and rebuilding a financially solid future. The first step is to get educated. Although the debtor education course that is required as part of the bankruptcy process taught you a lot about money management, it is always best to start fresh with new habits. Find out where the loose ends are in your expenses and set a budget to follow each month. Organizing and monitoring your finances can help keep you out of financial hardships down the road.
Many people assume getting credit will be difficult after bankruptcy. You may not get the lowest rate, or the highest spending limit, but you will be able to find a reasonable line of credit soon after your bankruptcy. The goal is to obtain a low limit card, charge minor purchases and maintain a consistent payment schedule. Now is not the time to buy another car or new living room furniture, find small and manageable purchases for the first 6 months to a year. You will begin repairing your credit quickly and show yourself to be a risk-free borrower.