Yes Virginia, There Is Life After Bankruptcy!

05 Sep Yes Virginia, There Is Life After Bankruptcy!

I received a telephone call the other day from a former client. She stated that she and her husband had just recently built their own house. I was very pleased to hear this and very happy for them. These folks had previously filed bankruptcy. And now, here they are moving into their new home.

Understandably, people are very nervous about bankruptcy. It can be a confusing and scary process. But, as these people can attest, there can be financial life after bankruptcy.

Many times when I talk with people initially about bankruptcy, they are concerned that they will lose everything and that they will “never have credit again.” I will explain that a bankruptcy filing is not going to help their credit scores–initially. But, if the clients do nothing, the delinquencies with credit card payments, repossessions and other items that are appearing on their credit reports will do its damage, too.

But, once you file bankruptcy and discharge most of your debts, you can get started on re-building your credit file. By this, you can obtain a small credit card and make sure you pay it off each month. You can obtain a small installment loan for a car and make sure you pay it. Make no bones about it, though, initially, you will pay higher interest rates for credit after bankruptcy and the credit may be tougher to find. But, it’s there.

With a lot of your past debt discharged, your debt-to-income ratio part of your credit score can actually improve. Then, when you factor in that you are now able to afford the credit that you have obtained after bankruptcy, pretty soon (relatively speaking), you will be able to obtain favorable credit on your terms. You will also find that mortgage lenders are now saying yes to your mortgage loan application when previously they would not even want to see you.

Just because you had to file bankruptcy, it does not mean that you will never be able to purchase anything on credit again. It may take a while and, initially, you may have to pay a little more, but there is life after bankruptcy.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.
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