Top 15 Lies About Bankruptcy. Lie #4: You Will Never Own Anything Again

by Brett Weiss, Esq.

April 16, 2012

Lie 4: You Will Never Be Able to Own Anything Ever Again.

Truth-o-Meter: 

A surprising number of people believe that once you file for bankruptcy, no one will ever loan you money or give you a credit card, a car loan or a mortgage, and you will be permanently destitute, living on the street….but this is completely false.

As noted in Lie #3, the overwhelming majority of people who file for bankruptcy keep everything they have. And once you get your discharge, there are absolutely no restrictions whatsoever on what you can own.

This is usually the point at which clients say, “Yeah, but I have a bankruptcy on my credit report. No one will ever give me credit ever again.” I tell them that this is simply not true.

While a bankruptcy remains on your credit report for 10 years after you file for a Chapter 7, and 7 years after you file for a Chapter 13, most of my clients report that the longer that passes from filing the less impact the bankruptcy has on their ability to obtain credit. The reason is very simple: lenders think that they can make money off of you by lending you money–despite your bankruptcy.

Once you get your discharge–usually about four months after your Chapter 7 case is filed–you can buy, own and possess whatever you can afford. Virtually all of my clients receive a ton of pre-approved car loans and credit cards as soon as they get their discharge. Before the fiscal meltdown when homes actually had equity, many of my Chapter 13 clients were able to refinance while in their bankruptcy. Assuming you don’t run into new credit problems after your bankruptcy, you should be able to qualify for a regular FHA mortgage at regular interest rates two years after your discharge.

And if you want to check out what some very famous people did after they filed for bankruptcy (and, yes, they owned a whole lot of things afterwards), look at my list of Famous People Who Filed Bankruptcy.

Related Posts Plugin for WordPress, Blogger...
The following two tabs change content below.
Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.

Last modified: June 21, 2012