Life After Bankruptcy
When you file for bankruptcy, you may think of it as the end to life as you know it, but be assured — there is life after bankruptcy, and there’s a good chance it will be a better one.
The fact that you filed in the first place means that you were living a financial nightmare, with debts and unpaid bills piling up, threatening calls and letters from creditors and collectors, and faced with losing your home and possessions. Filing for bankruptcy gives you relief from harassment from creditors and a chance to start again and take steps to get your financial life together.
The experienced Ohio bankruptcy attorneys at Fesenmyer, Cousino, Weinzimmer understand that financial problems can happen to the most hard-working and well-intentioned people. We offer a free consultation to examine your individual financial situation, your debts and your goals. Should bankruptcy be your best option, we will help you get on the path to financial solvency and find the best ways to make sure your life after bankruptcy is a good one.
Steps to Take
The last thing you want to do after filing for bankruptcy is go back to your old ways of spending and dealing with money, since they got you into trouble in the first place. You need to take steps to change your thinking and spending habits, rebuild your credit, meet your expenses, and even find ways to save and build for your future.
Here are suggestions as to how to move forward:
- Know Your Bankruptcy Situation — Understand the differences between Chapter 7 and Chapter 13 bankruptcy. If you have filed for Chapter 7, your bankruptcy is often discharged in a matter of months, while a Chapter 13 (payment plan) often takes three to five years of making agreed-upon monthly payments to reach discharge. This can make a difference if you want to do something like refinance your home, as homeowners in a Chapter 13 may be eligible to refinance after a year, while Chapter 7 homeowners will have to wait two years from the date of discharge. Also, you can expect your credit score to drop by at least 200 points after you file for bankruptcy. For Chapter 7, the bankruptcy will remain on your credit report for 10 years, and for Chapter 13 for seven years.
- Take Care of Paperwork — Keep all bankruptcy documentation. This will protect you by providing documentation for future purchases, disputing incorrect credit reports, or handling situations where creditors try to collect old debt.
- Learn Your Credit Score — This can be checked for free at myBankrate or com’s free Credit Report Card, and you can request one free copy of your credit report per year from Equifax, Experian and TransUnion at AnnualCreditReport.com. Examine your credit reports and make sure there are no errors or inconsistencies, and report any you find.
- Start Rebuilding Credit — You may have credit accounts that remain open after bankruptcy, but if you don’t, you should get a secured credit card. You can do this by depositing money into a secured account at a bank, which will then give you a credit card with a credit line that’s 50% to 100% of the deposit. If you make timely payments every month, you’ll be able to rebuild your credit, which will enable you to obtain a traditional card. While interest rates on traditional cards will be high, you won’t have to pay any interest if you pay off the balance in full each month. By rebuilding your credit, you can increase your credit score and eventually be approved for a mortgage, car loan, or credit card with lower interest rates and a higher spending limit.
- Make a Budget and Live Within Your Means — Examine your income and your outgoing essential expenses and spend accordingly. Eliminate or reduce discretionary spending and come up with a budget that you can stick to. Do whatever you can to cut corners and save – clipping coupons, brown-bagging lunches, cutting cable TV, eating out less, fixing your own hair, making do with the clothing you already have.
- Make Payments on Time — Make all payments on time — your mortgage payment, utilities, car loans and any other monthly expenses kept after bankruptcy. Establish auto pay and accounts to be paid electronically to keep you on track. If you were able to keep your house and you reaffirm your loan, the lender will report payments to the credit bureaus, helping to rebuild your credit.
- Start Saving — Even if you can afford to save only small amounts, it all adds up. Having savings will improve your chance of making a home purchase or refinancing and will provide an emergency fund for situations such as having your car break down, losing your job, or facing medical expenses. A goal should be saving three to six months of living expenses.
- Consider Taking a Loan — A few years after bankruptcy, you might be able to get a car loan or line of credit, but make sure you can afford to pay off the loan successfully. You may be eligible for a home loan as early as one to two years after bankruptcy. The Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) have specific guidelines for accepting borrowers who have filed for bankruptcy.
- Credit Counseling and Debtor Education — Take advantage of legitimate credit counseling resources that can help you learn about and develop good credit practices. The US Trustee Program webpage provides a list of debtor education resources.
Contact Us For Help You Can Trust
Going through bankruptcy is difficult, but with help and guidance you can successfully rebuild your life. The seasoned and compassionate Ohio bankruptcy attorneys at Fesenmyer, Cousino, and Weinzimmer understand the issues and the difficult decisions involved. We are committed to providing you with a high level of personal service to help you deal with your financial problems and make better choices in the future. We take the time to work with you, fully understand your situation and options, and help you decide on solutions that makes sense in your individual case.
Call Fesenmyer, Cousino, Weinzimmer at one of our office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) for a free consultation so we can determine what debt relief solutions will work best for you.
If dealing with bills and creditors has become overwhelming, you may be wondering whether debt consolidation or bankruptcy would be the better way to get you out of debt. The answer is complex and depends on your individual situation and factors such as your income, employment, assets, and whether you own a home. For more information on bankruptcy click here.