LIFE AFTER BANKRUPTCY
You have a fresh start, and some new challenges. Your credit rating, which probably wasn't all that great already, will be impacted by filing for bankruptcy. Filing for bankruptcy will have a short term negative impact on your credit rating, but not filing for bankruptcy may be worse. Not filing for bankruptcy and continuing to incur late fees, legal charges and judgements will continue to bring down your credit until you do something about it.
You really need to ask yourself several key questions including, 'how did I get here? What could I have done differently and what should I do differently in the future? And what have I learned from all of this? Your answers will help you create a better financial afterlife in the wake of a bankruptcy.
Many of my clients tell me that they were able to obtain a new car loan immediately after filing a chapter 7 bankruptcy, even while it is still on their credit report. FHA guidelines also allow you to get a mortgage two (2) years after filing a ch. 7 bankruptcy. You will also get solicited for new credit cards almost immediately because you can only file for a chapter 7 once every eight (8) years. The creditors know you have to pay back your debt to them so they will make credit easy to obtain, although at slightly higher interest rates. Generally, you do not want to incur more credit card debt, however you may want to get one credit card for emergencies or for contingencies such as booking plane tickets or car rentals. Remember, the whole point of filing for bankruptcy in the first place was to rid yourself of debt and get a fresh start, not to get into debt all over again.
After your bankruptcy has been discharged, you need to re-establish your good credit. You need to do so right away for a chapter 7 or after reorganization for a Chapter 13. Obviously, continuing to pay your other bills on time such as your mortgage and utilities will help to build up your credit. You may also want to get either a secured or unsecured credit card and pay it off every month. There are reputable companies available who will help you to build your credit back up. This can be explained more during your free initial consultation.
You are only able to receive a discharge in a chapter 7 bankruptcy after eight (8) years have passed since the commencement of the last case in which you received a discharge. You generally can file another chapter 13 case sooner (usually 4 years) if the need arises. Thus, you should not file a bankruptcy if you need the option of doing it again in the next few years. The case may arise if the reason you are filing bankruptcy is to discharge medical bills and you may have to incur additional medical bills in the future.