Life After Bankruptcy

Bankruptcy: it’s not something anyone opts for lightly. But for anyone overwhelmed by debt, it is often the only opportunity to start over. Whether you got here because of a job loss, a medical crisis, a catastrophic event, or by living outside your means, know that, as bleak as things may seem now, there is life after bankruptcy.

Chapter 7 

In a Chapter 7 bankruptcy people lost non-exempt assets, which are sold to pay off creditors. Your credit report will reflect the bankruptcy for 10 years, although you should still be able to get credit cards and car loans, though the terms may be a bit ugly. After two years you should be able to qualify for a conventional loan without a cosigner.

Chapter 13 

This type of bankruptcy is often referred to as a reorganization because it involves the restructuring of debt and the creation of a payment plan that addresses creditors’ needs over a period of five to seven years. The bankruptcy will be included on your credit report for seven years, and you should be able to see improvements in your ability to obtain credit as you make inroads on your debt in a year or more.

Rebounding 

One key goal after filing for bankruptcy will be to bump up your credit score as quickly as possible. So every year, get a free report and analyze it for errors that might hurt you. Challenge anything that looks questionable.  Other keys to rebounding might be worth considering:

1-    Watch out for scams claiming to repair your credit. Any place that wants your payment up front or that tells you to stay away from credit reporting agencies should be viewed with caution. Other red flags include a failure to discuss with you legal rights, and of course, asking you to do something illegal, such as using a false Social Security number.

2-    Increasing your credit mix can have a significant impact on your credit score. You can report rent payments that are made on time, which could give you a 70-point boost in just months. Another idea is to take out a small loan, known as a credit builder, giving you a chance to demonstrate that you can handle the payments over time.

3-    After accumulating enough emergency savings to carry you through at least three months should you run into problems, think about getting a secured credit card. Put a down payment on the card, make on-time payments for a year, and see a jump in your credit score.

It’s Tough—But Doable 

Sure, bankruptcy is difficult.  But you rid yourself of a boatload of worry, and there are blue skies ahead. At the Law Office of Julia Kefalinos, our Miami bankruptcy attorneys are here to provide the assistance you need. Schedule a confidential consultation in our office today.