Life After Bankruptcy

Life After Bankruptcy: What Really Happens

By: Lisa Laprade
Published: October 2006

Bankruptcy can seem like the answer to so many of life’s problems - before your very eyes all of your credit card balances are wiped clear. The harassing phone calls from creditors looking for money that you just don’t have come to an abrupt halt. All seems great, right? Not necessarily. If you’re thinking about taking this life-changing step, there are a few items that need your serious consideration before signing your name on any dotted line.

Your credit history is NOT clear, balances are merely zeroed out- Even though your credit card and other balances will read a big, fat ZERO, all of your late and non payments will still be on your credit report in black in white, clear as crystal for anyone who has the authority to pull your credit to see. Right next to all of your late payments, the words “Discharged” followed by the month and year of your filing (as well as the month and year your bankruptcy will no longer appear on your credit history) will appear so that any potential creditor will know that you were unable to pay your bills.
Be ready and willing to explain your reasons for filing for bankruptcy- Whether you like it or not, you’re going to have to explain your reasons for declaring yourself bankrupt. (Pleading the 5th or “None of your Business” will not set well with the majority of those who ask). Be brief, be to the point, and most importantly, and be honest in all of your dealings. Don’t point fingers, either. “I had a messy divorce” or “My credit cards got out of control” is much better than, “My ex-wife maxed out all of the credit cards and left me with the bill!” You’re a grown up and must accountable for all of your actions.
Think about all who will see your credit history throughout the next 10 years. Yes, ten very-long years is the amount of time that the bankruptcy will stay in tact on your credit report. In addition to any future lenders and/or creditors, there are many different folks who, with your consent can impact your life that can and will obtain a copy of our credit report, This includes potential employers and landlords who just may look upon your adverse credit history as a sign of irresponsibility and inability to pay bills or may consider you a higher risk than someone who has never filed.

If you are lucky enough to know someone who has filed for either chapter 13 or 7 (personal bankruptcy filings), they may tell you that the entire process was a piece of cake – a venture without any side effects. Of course, the odds of someone having this sort of experience is about the same as someone informing you that their personal experience was anything but pleasant, possibly using the words “nightmare” and “humiliating” instead of “cake” and “venture”. No two people are the same, nor are any two creditors; therefore no two bankruptcies could possibly be alike

The key to a successful bankruptcy is to be proactive when it comes to rebuilding your credit. Even though the filing will stay on your credit report for 10 years, any positive credit and/or comments, such as great markings with a secured credit card, will increase your score significantly more than if you sit around doing nothing and just wait for the 10 years to pass. This is your credit we’re talking about here - it’s something that you alone are responsible for - as well as being one of the few things in life that can be more valuable than money itself.

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