Life After Filing a Personal Bankruptcy
I have been filing bankruptcy cases for over 28 years and after having represented over 20,000 people in metro Detroit, have kept in touch with many of my clients. Most of my clients had such a positive experience during a tough time that they have referred their friends and family members to my office when they fell on tough financial times.
They refer them to me because their financial life improved after their debt was eliminated with a bankruptcy discharge. I have filed many cases for friends and acquaintances in the Detroit and southeast Michigan area, all of whom have mentioned on more than one occasion how the bankruptcy filing really helped them during a difficult financial period in their lives and how their lives have improved since. A common misconception is that you cannot obtain credit for 7 years or 10 years after bankruptcy. I’m not really sure where this comes from, but I hear it all the time from my clients. The discharge order prevents creditors from attempting to collect debt from you; it does not mean that creditors cannot extend credit to you after your bankruptcy. Bankruptcy can appear on a credit report for up to 10 years in the case of a Chapter 7, but is typically ignored by creditors after only a couple years. Most of my clients report to me that within just a few months of filing, often before their case is even closed, that they receive offers from creditors extending credit in the form of credit cards, car financing, personal loans, etc. I always advise my clients to be cautious when they venture back into the credit market and to carefully shop around for the most affordable credit interest rates, which are often lower after a bankruptcy filing. Here is a link to my post on: How to get a credit card after filing bankruptcy. As part of my legal services, I pull a bankruptcy specific credit report for each of my clients who file with my office. Part of this credit report contains my client’s existing credit score and an analysis of what the score is likely to be approximately one year after the case is closed. In the vast majority of these cases, the score is estimated to go up, sometimes substantially. By the time most people file a Chapter 7 or Chapter 13 petition, their credit score has been extensively damaged due to collection actions, numerous late payments or non-payments and lawsuits or judgments, that a bankruptcy discharge that wipes the slate clean has a tremendous positive effect.
A bankruptcy filing will help you get back on track and rebuild your credit. Here are some steps to get the most from your bankruptcy discharge and the fresh financial start it provides.
- Obtain a copy of your credit report at least once per year. It’s free. www.annualcreditreport.com
- Check it for accuracy and use the online dispute forms to dispute any inaccuracies. It’s easy.
- Be sure that debts that were included in your bankruptcy state that they are “Discharged in Bankruptcy” or “Included in Bankruptcy” on the credit report.
- Pay all other bills you receive after bankruptcy on time. This includes all utility bills, medical bills, car notes, new credit cards, etc.
- See my post on How to improve your credit score after filing.