If you are thinking of filing for bankruptcy, then you have probably been dealing with financial troubles for quite some time. But 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 debt. 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 off of and the rest of their income is distributed to their creditors by a court appointed trustee. During this payback period, they are unable to obtain any new forms of credit.
Chapter 7 filers get to keep all their income, but this does nothing to save them from the struggles that all bankruptcy filers face once the process begins. In fact, their lives may be affected in ways they may 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. And it means proving that you can effectively manage credit in the future. That means keeping your nose clean, starting a savings account, and accepting 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. But 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? Choosing the Right Attorney Is Crucial
How you live your life after bankruptcy is just as important as the process itself. You deserve a skilled attorney that understands this, and that will help you before, during, and afterwards to help you pave your way to a brighter financial future. The Law Offices of Eric Zelazny offer these services because we care. Get the representation you deserve. Call 708-888-2299 and schedule your free initial consultation with an experienced Tinley Park, Illinois bankruptcy attorney today.