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Life After Bankruptcy: 3 Ways to Start Fresh

December 6th, 2012 by

bankruptcy

From March 2011 – March 2012, more than 1.3 Americans filed for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Medical expenses, job loss and overextended credit card bills are the top 3 leading causes of personal bankruptcy in the U.S.

The economic decline of 2008 and rise in unemployment have helped lessen the stigma surrounding bankruptcy. For most filers, bankruptcy isn’t just a viable option – it’s the only way to get financial relief. A recent study by the Institute for Financial Literacy’s Center for Consumer Financial Research revealed that the “average” bankruptcy filer is between 35-44, white, married and college-educated. But people of every stripe and size file for bankruptcy.

Almost twice as many people file for Chapter 7 bankruptcy. Chapter 7 can completely eliminate all credit card debt, medical bills and other unsecured debt. New legislation has made filing for Chapter 7 more difficult, however. In some cases, individuals may only qualify for Chapter 13 bankruptcy, which allows you to pay off debts at a reduced rate for a period of usually 3-5 years.

Life After Bankruptcy: Establishing Credit

Understandably, life after bankruptcy can feel uncertain. How will a bankruptcy affect your ability to get a mortgage, a loan, an apartment in the future? Since a bankruptcy stays on your credit record for 10 years, it’s understandable why you might be concerned. But there are a few things you can do to re-establish your credit:

  • Get a secured credit card. The key here is to make your payments on time. Since secured credit cards usually have low limits ($200-300), this should be very manageable.
  • Pay off balances in full. This can be difficult with larger lines of credit, but paying off the balance of a low line of credit should be much easier. Do this as often as possible; future creditors want to see that bankruptcy filers can pay off balances as often as possible.
  • Improve your budgeting techniques. Many strategies for rebuilding your credit involves getting credit again and managing it better than before. But to do this properly, you need to have a budget and stick to it. One of the most important things here is to distinguish between needs and wants. Focus on your needs first, and come up with a plan that’s balanced and realistic.

If you haven’t filed for bankruptcy but just can’t make ends meet, consider talking to a bankruptcy lawyer right away. The bankruptcy lawyers at 1-800-THE-LAW2 are compassionate, professional and experienced. They can make the bankruptcy process stress-free and easy. Plus, they offer free consultations – no obligation!

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