Bankruptcy is designed to help, not hurt, the people who file bankruptcy. People considering bankruptcy may be hopelessly in debt and bankruptcy may be the only option to resolve a frustrating, stressful financial situation. Most people feel an immediate sense of relief after beginning the bankruptcy process. Simply meeting with a bankruptcy attorney to discuss options makes most people feel better right away. Our offices have had many clients tell about how they have been avoiding the bankruptcy issue for as long as they could and they are so thankful they are now going to get something done about it.
After the bankruptcy is filed, no creditors can attempt to collect any debt owed. That automatic protection given to debtors who file bankruptcy means no collection letters or additional bills, no garnishments or levies and best of all, no debt collection phone calls. This automatic protection by the bankruptcy court can help debtors feel more relaxed and confident by knowing they finally have space to breathe without being harassed by their creditors.
After the bankruptcy is completed and a debtor has received a discharge, the debtor can begin to rebuild a strong credit rating. A bankruptcy filing will be listed on a credit report for up to 10 years but that’s not something that should deter someone from filing for bankruptcy protection in the first place. A credit report has to show the full credit history of an individual and that history would be incomplete without notice to future lenders like mortgage companies or car dealerships that certain debts listed on the credit report are not collectable. Listing the bankruptcy on the credit report can actually help lenders who know how to read the report correctly because they know debts before the bankruptcy filing can be discharged and there is no threat that creditors with debts that were discharged in the bankruptcy will be able to collect on the discharged debt.
Many clients have told our bankruptcy lawyers they never want to see another credit card the rest of their life and while that’s a great attitude to have, the truth of the matter is that in today’s world it may be difficult to function without one. People filing for bankruptcy often think they will never be able to get another credit card. Believe it or not, most debtors that file bankruptcy usually get new credit card offers in the mail shortly after filing for bankruptcy. Credit card companies realize the old debt is gone and there is a good chance the debtor will be able to make future payments now that their debt load is more manageable.
Many of our clients are very concerned about their credit rating after filing bankruptcy. We often tell them that’s really the least of their worries going into the bankruptcy because their credit situation is such a mess now, it can only get better. Many debtors who file for bankruptcy see an improvement in their credit rating after bankruptcy. Credit scores are based on a number of factors, but one important factor is your debt to income ratio. If your debt is much higher than your income, that’s a negative factor for your credit score. After filing bankruptcy, the debt to income ratio can be flipped because the debt that was discharged is gone and income will now exceed debt.
There is no legal prohibition to someone buying a house or car after they have filed bankruptcy. There are no time limits set out in the law that prohibit you from incurring debt after your bankruptcy has been completed. The decision to qualify you for a loan is one that is made by the lender and although you may have to look a little harder to find one that will work with you, there are plenty of lenders that will help you to rebuild your credit after filing bankruptcy.