Life After Bankruptcy: Re-establishing Credit and Other Post-Bankruptcy Concerns
A common concern of anyone thinking about filing bankruptcy or going through the process is what happens after bankruptcy and how to recover. Will they ever be able to take out loans? How can they re-establish credit? Can banks and other lenders hold bankruptcy against a person?
Andersen, Ellis & Shephard (formerly David Andersen & Associates, P.C.), in Grand Rapids, Michigan, is a debt-relief agency with extensive experience in helping clients achieve financial relief through the filing of consumer bankruptcy. With Board Certified Consumer Bankruptcy Attorneys on our team, we can address your concerns and help set a realistic expectation of what you can expect after a bankruptcy. We want you to feel comfortable about your decision to file, and be prepared for the steps you will need to take to re-establish a solid financial position.
People file bankruptcy due to circumstances that necessitate relief from debt that cannot be paid on time. Sometimes filing bankruptcy is the only way to start the process of rebuilding credit because bad debt hangs on until it is paid or discharged. A credit report “write off” does not mean the debt is cancelled, but only means that it is a bad debt and is a bad mark on credit reports. The sooner a person files bankruptcy, the sooner the person can rebuild credit. Rebuilding credit involves having a good solid income, paying bills on time including rent, house and car payments, utilities, cell phones, insurance, etc. and by all means do not bounce checks or pay bills late! By staying strictly on time and up to date on post-bankruptcy payments, credit will improve over time!
Life After a Bankruptcy
The most important thing to remember is there is life after a bankruptcy. Although bankruptcy stays on your public creditor report for up to 10 years, many lenders will finance you shortly after filing bankruptcy. In fact, it is common for banks and mortgage companies to approve a mortgage in as little as two years after your bankruptcy discharge.
In addition, your day-to-day life should not be affected. Employers and benefit agencies cannot discriminate against you based on your bankruptcy status. Neighbors, families and friends do not ever need to know of your filing. You get the benefit of maintaining your life just as before the bankruptcy, without having to worry about the past debts.
Rebuild Your Credit
A common misconception is that filing bankruptcy ruins credit so badly that an individual will forever have a difficult time receiving personal loans or mortgages. Bankruptcy can actually improve your credit in the long run because it improves your debt-to-income ratio puts the past due debts behind you.
Once the bankruptcy filing is closed, debtors can immediately begin rebuilding their credit by maintaining steady employment, continuing to pay bills on time, keeping a good relationship with the bank, not bouncing checks, maintaining appropriate funds in a checking account, paying rent, house payments, insurance and utilities on time and other smart financial behavior. While not immediate, a credit score will improve with smart behavior over time. We suggest that you pay all bills on time, pay insurance on time, do not bounce checks, do not let insurance lapse, and keep a good steady income. Late payments prolong the bankruptcy recovery process.
If you want to learn more about how to recover from bankruptcy, contact our office in Grand Rapids, MI today at 616-784-1700 to schedule an initial consultation and help manage your recovery process.