Bankruptcy is a gamechanger for hundreds of thousands of people each year. To maximize the benefits of this debt-relief process, however, you will need to know what to expect from life after bankruptcy and how to navigate the various challenges you may face in the coming years.
If you make the right moves, you may enjoy long-lasting freedom from debt and the invaluable opportunity to build a more secure financial future for yourself and your loved ones.
Here are 6 tips for maintaining—and strengthening—your financial footing after filing for bankruptcy.
1. Monitor Your Credit.
Many people trust loan companies, credit card companies, and credit reporting agencies to keep track of their payments and other financial affairs. However, even the biggest companies are capable of making mistakes, and you have the right to set the record straight. As such, you should check your credit report regularly to ensure everything is up to date and correct.
These routine check-ups can help you:
- Stay on top of current debt
- Discover and report incorrect information
- Identify fraud (i.e. when someone uses your information to take out a credit card or loan)
When you file bankruptcy, your case will appear on your report. Additionally, any debts that the court discharges should disappear.
2. Stop Collection Agencies from Collecting Discharged Debts.
Did you know that it is illegal for a creditor or debt collector to collect debts that were discharged by a bankruptcy court? You are no longer legally liable for those debts, but some agencies and lenders will ignore the court ruling. The Consumer Financial Protection Bureau has sample letters you can use to tell a collection agency to stop contacting you, and your attorney can hold agencies accountable for violating your rights.
Keep in mind that, if the court discharged secured debt (e.g. a mortgage or auto loan), the lender can still seize the collateral (your house or vehicle) after your bankruptcy.
3. Rebuild Your Credit.
Depending on the type of bankruptcy you file and the state of your credit score before filing, bankruptcy may damage your credit. However, many people can quickly rebuild their credit by making smart financial decisions in the years following their case.
You will likely not be able to take out a mortgage or another type of loan immediately after filing bankruptcy, and you might only qualify for secured credit cards. However, the impact that the bankruptcy has on your score will diminish over time, and the bankruptcy will disappear from your report after either 7 or 10 years (for Chapter 13 or Chapter 7, respectively).
4. Make Payments on Reaffirmed Debts.
When you file bankruptcy, you may either discharge or reaffirm your debts. You may want to reaffirm your debts if you want to keep the collateral that is attached to those debts. For example, if you reaffirm your mortgage and stay up to date on payments, you can keep your house after filing. If, on the other hand, the court discharges the debt, your lender would foreclose on your home after the bankruptcy process is complete.
In general, making timely payments on all reaffirmed debts is key to keeping all your property after filing bankruptcy.
5. Create a Long-Term Financial Plan.
Many people file bankruptcy and enjoy a few years of relief before finding themselves in the exact same situation as before. Unfortunately, a second or third bankruptcy is not as advantageous as the first, and it may not even be possible to file again if not enough years have passed since your first filing.
To make the most out of your bankruptcy, take the time to develop a realistic financial plan that helps you maintain long-lasting freedom. Some people are forced to file bankruptcy because of events beyond their control, but others have to file because of poor financial decision-making. Either way, a thorough plan can help you make proactive decisions, set achievable short-term and long-term goals, and move toward a stronger and brighter financial future.
6. Seek Professional Help.
People who specialize in legal and financial matters can help you craft a long-term plan to accomplish your goals and stay out of debt.
A dedicated attorney, for example, will help you not only file bankruptcy but also navigate life after filing. They will educate you about both your rights and options, helping you establish a solid foundation for years of financial security and growth. In short, investing in the dependable counsel of an experienced professional can make the difference between surviving and thriving.
Buchalter & Pelphrey Attorneys At Law provides services backed by 45+ years of experience. We help clients implement fully customized debt-relief solutions that consider their unique circumstances and needs. If you need more information about bankruptcy, guidance through and after the process, and steadfast representation from start to finish, put your case in the hands of our dependable legal team. Call (321) 320-6088 or contact us online to begin with a no-cost consultation.