Life After Bankruptcy

You Declared Bankruptcy and Your Debts Are Discharged. Now What?

Life before and during bankruptcy can be difficult, but after declaring bankruptcy and getting the fresh financial start you’ve long-awaited, you might feel overwhelmed as you work to recover from bankruptcy. Many people don’t realize that bankruptcy involves substantial work even after their debts have been wiped away. For these reasons, it’s important to be prepared for life after bankruptcy, as it can be tough to “bounce back” from this process.

Declaring bankruptcy may be the end goal for many debtors, but once their debts are discharged, there is much work to be done moving forward. Rebuilding credit and establishing a solid financial foundation is a long process in and of itself, but ultimately, it’s worth it. That being said, our lawyer is available to answer any questions you may have about how to recover from bankruptcy. We understand that you have a lot on your plate, but allow us to help alleviate the burdens of your situation by providing effective, straightforward, and reliable counsel as you navigate life after bankruptcy.

Contact us online or at (718) 340-3385!

Tips to Recover from Bankruptcy

You must invest the time, energy, and dedication to fully recover from your debt discharge. Many people mistakenly believe that once they declare bankruptcy, they’re good to go and have nothing else to worry about. While it’s true that filing for bankruptcy is a significant solution and pathway to a fresh financial start, you must prepare for the aftermath.

To help make this process easier, we explain 8 tips below to help guide you through life after bankruptcy:

1. Pay your bills on time: It’s important to pay your bills on time, as your payment history comprises a significant amount of your credit score. Don’t put it off for another day ― pay those bills sooner rather than later! However, avoid paying your credit card debt too far in advance because the creditor may not generate a statement balance to report to the credit bureaus.
2. Monitor your credit report: It’s important to check your credit report monthly or even more frequently to ensure it reflects your actions. Imagine if you paid your bills on time but the credit bureaus failed to report your responsible efforts; this could position you for further financial issues. To best avoid this, monitor your credit report on a monthly basis or more to ensure it accounts for the positive efforts you’ve made to rebuild your credit.
3. Don’t fall for credit scams: People who declare bankruptcy often get contacted by scammers claiming they can repair their credit “fast and easily.” However, if you’re getting asked to pay for services upfront, not getting informed of your legal rights, or being told to avoid contacting credit reporting agencies, then you may be falling for a scam.
4. Apply for a secured credit card: A secured credit card establishes credit limits based on how much money you deposit. Thus, if you deposit $1,000 as collateral, then you have a $1,000 spending limit. Banks will report your timely credit card payments to the credit bureaus accordingly. As such, a secured credit card can help you rebuild your credit after bankruptcy
5. Avoid past mistakes: Reflecting on the instances that contributed to your bankruptcy filing is of the utmost importance. Think about the mistakes you’ve made and the circumstances that prompted you to file for bankruptcy. Were you spending more than you earned? Did you fall for scams? Did you obtain a high-interest credit card or loan? Detect these weaknesses so you can deter them in the future.
6. Increase your credit mix: Your credit mix refers to different credit card accounts you have, including loans, mortgages, credit cards, etc.By increasing your credit mix, you can help rebuild your credit score if you manage the diversified accounts responsibly.
7. Be patient: Life after bankruptcy is liberating and demanding. The two go hand-in-hand. In order to get back up on your feet financially, you have to put in a good amount of work, as you can see from the information listed above. You’ve overcome the hard part ― declaring bankruptcy ― so you can have peace of mind knowing that it will only get better.

Does Bankruptcy Affect my Job Search?

Unless you’re applying for a financial position such as an investor or accountant role, bankruptcy shouldn’t affect your chances of getting a job. Most employers run background checks on job candidates and may inquire about your bankruptcy filing if circumstances call for it. To prepare for this probability, research the company ahead of time to better gauge whether you will be asked about your filing.

Can I Get a Loan After Bankruptcy?

Many people who declare bankruptcy worry that they’ll never be able to get a loan or mortgage again. That is not the case. While it can be challenging to obtain this financial assistance until a few years after bankruptcy, you could qualify for a loan or mortgage sooner if you maintain good credit. In the meantime, you should consider renting a property rather than purchasing one.

If you want to start a business, prepare for a long road ahead because lenders avoid offering business loans for several years after a bankruptcy filing has taken place. Some creditors may offer collateral loans, but because they’re high-risk loans, you should avoid these at all costs.

Credit After Bankruptcy

One of the main aftereffects of bankruptcy is a lower credit score. While bankruptcy doesn’t obliterate credit, it will lower your credit quite a bit. However, while your credit score may be lower, you can still apply for a secured credit card to help you pay for expenses.

Most credit cards will be out of reach until you can rebuild your credit score, but secured credit cards require a safety deposit in exchange for a credit line. In other words, if you pay a deposit of $1,000, you can access a credit line for the same amount.

Getting a Mortgage After Bankruptcy

Once you start working on your credit score, you may qualify a mortgage. Traditional mortgages are difficult to get for a few years after bankruptcy, but if you can prove that you are diligently working to improve your credit, you’ll be able to qualify for one in no time.

Until you can qualify for a mortgage, renting may be the best option for finding a new residence. Most apartment complexes won’t accept a potential resident without good credit unless you can provide several months of rent upfront. Before you attempt to rent an apartment, be sure that you have enough money set aside to cover the down payment. Some renters use a rent support service to help you use your rental payments to build up your credit quicker.

Job Searching

Bankruptcy won’t disrupt the job search unless you’re applying for a financial position. If you’re an aspiring fiduciary, accountant, or investor, bankruptcy could seriously hamper your employment efforts.

Nearly every employer nowadays performs a background check on applicants. While many positions don’t require a search of your financial history, some employers may view bankruptcy as a red flag even outside the finance world. That said, preparing responses to inquiries from employers if they ask about your past money problems is a must. If issues beyond your control contributed to your situation, the hiring manager would likely be forgiving.

Always research a position ahead of time to see what the company looks for in a candidate, in addition to what they search for in a background check. Financial positions, in particular, will have preferences regarding financial history, so study up before you apply!

Entrepreneurship

Starting a business is challenging at the best of times, but if you’ve filed for bankruptcy in the past few years, getting your idea off the ground may be challenging to say the least. Business loans and lenders are particularly picky when it comes to investments. Lenders are unlikely to offer you a business loan or investment for several years after completing your bankruptcy case.

Some creditors boast open-minded lending practices, but be aware that these lenders offer sub-prime loans that are collateralized. This means that in exchange for the funding, you have to put your car or house on the line as collateral if things go wrong. These loans are high-risk, so it’s best to avoid them if possible.

Questions? We Can Provide Answers.

The most important thing to remember is that life after bankruptcy won’t be difficult forever. You will be able to recover and move on from hard times. With the proper guidance, you can find yourself in better standing sooner than you think and on your way toward financial security.

The bankruptcy attorney at Law Office of Seni Popat, P.C. has extensive experience in helping people that are in your position file for bankruptcy and recover post-bankruptcy. We understand that life after bankruptcy can be overwhelming, but with the Law Office of Seni Popat, P.C. on your side, you can rest assured that we have your back.

To discuss your situation and learn about your plan of action, contact us at (718) 340-3385!