Life After Bankruptcy

You got your filing done for bankruptcy, went over the specifics with the court, and completed all the paperwork and payments. Or you might be even in the process of deciding whether or not you want to file for bankruptcy, either way, it’s a good idea to think ahead and visualize your life after your case has been settled. So, after bankruptcy, what’s next?

Before we begin, if you’re thinking about filing for bankruptcy read our blog post “Thinking about filing for bankruptcy” to learn more about the two types. Now a Chapter 7 bankruptcy will stay on your credit report for up to 10 years while Chapter 13 stays for seven years. With this, getting a loan may be difficult for a while. There are the harder challenges with getting credit for future cars or a home.

Moving On After Filing

Now that you finished making your last payment, it’s time to build yourself a solid foundation. First, make sure to save all your paperwork, this is important as in the future you might be asked for copies of your bankruptcy case by lenders if you apply for a loan. Also, if a debt collector comes back and tries to collect a debt that was discharged during your bankruptcy then you also have that documentation.

Rebuild Your Credit

Pay your bills on time, this is one of the best ways you can rebuild your credit. Open up a secure credit card (if you can) to start rebuilding your credit. Make sure to monitor your credit report regularly, you can get a free credit report as well from and compare activity from all three of the main credit bureaus — Equifax, Experian, and TransUnion. Keep your credit utilization ratio low and know that it’s very possible to see your credit score recover after bankruptcy. A report” found that among people who had filed for bankruptcy and then sought loan offers on LendingTree the following year, 56% already had credit scores of 640 or higher.”

Save, Save Save.

Do yourself a favor and start to save money, the last thing you want is to repeat what you just went through. Open up a savings account to reestablish good financial habits, most importantly you’ll have a way to access these funds in the case of an emergency. A good rule of thumb is to Aim for three to 6 months’ worth of living expenses. Regularly review your financial situation, avoid impulse buying, and adjust your plan as needed.

The good news is that many banks offer second-chance programs for those who went through bankruptcy, ensuring a positive balance in your account will show employers and creditors your reliable cash flow.

Maintain Your Home and Job

After Bankruptcy, it’s important to maintain your home and job to show creditors that you are reliable as they would consider your income and employment history to know if you’ll be able to repay your loan.

In the end, take some time to reflect on your spending habits to ensure long-term financial stability.

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