Life After Bankruptcy

What Happens After Bankruptcy??lifeafterbankruptcyispossible

There’s a lot of considerations when it comes to filing for bankruptcy. One thing many people don’t consider is what happens when you come out the other side. Life doesn’t immediately snap back to a carefree financial existence.

It’s important to discuss what the ramifications of bankruptcy are after your are released.

1) Can you buy a home after bankruptcy?

The answer is “Yes”. However, it will be much more difficult than if you hadn’t gone through bankruptcy. A lender will be more skeptical and much more vigilant. You will probably need a significant down payment, and maybe even a co-signor for a mortgage. That being said there are builders and mortgage companies that are willing to take a chance on you. Of course, your interest rate will be higher than the average consumer. You can own a home, and considering the recent cliff house prices went over you might be able to get a deal. But, it will be harder than if yo had not been bankrupt. Burt Reynolds and Larry King are two examples of celebrities who declared bankruptcy and were still able to purchase mansions. It was probably easier for them than it will be for you!

2) When you emerge from bankruptcy you’ll probably want a credit card.

This will be tougher as well.

You’ll probably start off with a prepaid debit (credit) card and slowly gain trust from the creditors. Time heals all wounds, and in financial terms that means 3 -7 years until you are back in good credit graces. Conditional on maintaining your obligations, paying on time, and not getting in over your head.

You’ll need to become very focused on checking your credit report. It is estimated that 80% of credit reports contain some incorrect information. As a discharged bankrupt you simply can’t afford anything negative on your report.

turningmylifearoundEven the price you pay for a car, and the payment interest rate (if you can convince a lender to finance it) will be higher than normal. A new mistake on your credit report might make you so you have to pay cash for everything!

It’s important that you understand that bankruptcy is something you can’t do every year or two. You can’t simply run up the plastic, take some exotic trips and then claim bankruptcy. The new laws state that you can only file every 8 years if you claim Chapter 7 bankruptcy.

If you don’t want to wait that long, or don’t want to liquidate everything, consider a debt settlement agreement or consumer proposal. You’ll get your credit back faster.

How Bad Can It Get After Bankruptcy?

That is as individual as the situation that lead you into bankruptcy. There are situations were someone emerges from bankruptcy, it energizes them and they earn great wealth. They respect their money, don’t overspend and put themselves in a situation where an unfortunate downturn won’t affect them.

Other people emerge from bankruptcy bruised and crest fallen. They seem depressed and act like victims. They struggle with finances and money until they end up back in the debtor situation again.

How bad or good things are after you emerge from a discharged bankruptcy is really up to the person being given the second chance.

It’s always good to take a hard look at what got you into an uncomfortable situation, and learn from it so it doesn’t happen again. Then again, sometimes things happen that are completely out of our control. We just have to make smart decisions, pick ourselves up, and get back on the path we wanted to travel on.

Good luck