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Life After Bankruptcy: What You Need to Know and What To Expect

Filing a bankruptcy is a huge decision to make. When you think about bankruptcy, you are inclined to think about what your life after bankruptcy will be like. Will you be living in shame? Will you ever be able to buy a home or a car again? If so, when can you live a normal life? You’ve heard that bankruptcies exist on your credit record for 10 years. Is this how long it will take for you to get any credit? There are many misconceptions out there. It is very unlikely that you will need to wait a long time to get a good loan or credit line.

Will Everybody Know About Your Bankruptcy?

So, who can find out about your bankruptcy? It will basically be a few marketers who are looking to sell you services and anyone else who runs your credit report. You won’t have to live like you have a sign over your head that says “I Am Bankrupt”. A bankruptcy filing or bankruptcy petition includes a list of creditors who need to know about your bankruptcy filing to stop them from collecting on your debt. This list of creditors will be notified by the court system about your bankruptcy. Your employer could find out if any of these creditors call your employer or if your employer needs to run your credit report for any reason. It is common for people in the financial industry to have their credit and background records run before handling sensitive financial information for their employer or potential employer. When you apply for a loan or credit card, the bank will run your credit report and will be able to see your bankruptcy. Otherwise, anyone else who isn’t running your credit is not likely to find out about a bankruptcy filing. Although a bankruptcy filing is public information in that it can be researched in public court systems, someone needs to proactively research you in the court system or your credit report to find out about your bankruptcy.

Why Will Banks Extend You Credit?

Banks will extend you credit because they know that bankruptcy is the beginning of a path to repair your credit record. It is a refresh of your financial debt situation. The banks are aware that you can only file for Chapter 7 bankruptcy once in every 8 years. If their loans or credit lines are less than 8 years, they know you can’t file for bankruptcy again within that period to get rid of the debt. Take car loans for example. Most car loans are only 5 years. If you’ve recently filed for bankruptcy, it is very unlikely that you will be able to discharge your debt in bankruptcy again if it is within the 8 year window when you cannot file Chapter 7. You can file a Chapter 13 after 4 years from when you filed the Chapter 7, but that involves a repayment plan of your debt. So, there is much less risk than if you had bad credit and you haven’t filed for bankruptcy yet.

It’s Easy To Go And See For Yourself Even Before You File Bankruptcy

Before you file for bankruptcy, you can make some calls to figure out how you will manage credit in the future. Call your credit card companies, banks, and car dealers that you will possibly want to do business with in the future and ask them what their policies are in working with people with bankruptcy filings on their credit record. It is very likely that they can work with you under special programs or rates. You can even check with a mortgage broker on how long you have to wait before you can get another home loan after a bankruptcy. In most cases, you can get a home loan 3 years after a Chapter 7 bankruptcy filing.

Do your homework and get comfortable with the situation before you file.

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