If you are thinking of filing for bankruptcy, then you have probably been dealing with financial troubles for quite some time. You may also be worried about what life will look like once it is all over. Is it as bad as creditors say it is? Once you file, is there anything you can do to reestablish your credit? The short answer to both of these questions is yes, but just like with most aspects of credit, the in-depth answer is a bit more complex than that.
A Fresh Start… Sort Of
On one hand, bankruptcy offers a fresh start. For Chapter 13 filers, this comes in the form of knowing that your debts will be paid through the reorganization process and in the cessation of constant calls from your creditors. For Chapter 7 filers, it is a chance to completely walk away from many of your debts. Unfortunately, this fresh start comes at a pretty hefty price.
Chapter 13 bankruptcy filers will typically spend the next three to five years in a no-frills kind of lifestyle. They have a set amount to live on, and the rest of their income is distributed to their creditors by a court-appointed trustee. During this payback period, filers are unable to obtain any new forms of credit.
Chapter 7 filers get to keep all their income, but this does little to protect them from the struggles that all bankruptcy filers face once the process begins. In fact, their lives may be affected in ways they might not have considered. For example, they may find that their car insurance rates suddenly increase since many insurance companies now base their premiums on credit score and credit risk.
The Path to Rebuilding Credit
While the path to rebuilding credit is an arduous one, it is not impossible. In fact, it is much easier these days than it used to be, but it does mean making some serious lifestyle changes. It also means proving that you can effectively manage credit in the future. You will need to make good financial decisions, start a savings account, and accept that your choices will be limited for a while.
Secured credit cards are often the first step. You can expect high interest and extra fees, but if you avoid using your full balance and always pay off your balance, you may be able to apply for an unsecured credit card in about a year. You should only apply for one, and if you are denied, wait at least six months before trying again.
Once you are approved for an unsecured credit card, it is critical that you continue to keep your utilization low and pay off your balance each month. Remember: There is a reason you ended up filing for bankruptcy in the first place. Learn from your experience and make different choices in the future and, hopefully, you will never have to go through the process again.
Thinking of Filing? A Rockland County Bankruptcy Lawyer Can Help
How you live your life after bankruptcy is just as important as the process itself. You deserve a skilled attorney who understands this, and who will help you before, during, and after the bankruptcy filing to help pave the way to a brighter financial future. Contact an experienced Hudson Valley bankruptcy attorney at the Law Offices of Robert S. Lewis to receive the legal guidance you need. Call us today at 845-358-7100 to schedule a free consultation.