Top 15 Lies About Bankruptcy. Lie #5: You Will Never Get Credit Again

16 Apr Top 15 Lies About Bankruptcy. Lie #5: You Will Never Get Credit Again

Lie #5: You Will Never Be Able to Get Credit Ever Again.
(Variations: You Will Never Be Able to Get a Car Loan Ever Again. You Will Never Be Able to Get a Mortgage Ever Again. You Will Never Be Able to Get a Credit Card Ever Again. Banks Will Lock Their Doors When They See You Coming.)


Quite the contrary. Filing bankruptcy gets rid of debt. Getting rid of debt puts you in a position to handle more credit, and this makes you look more attractive to would-be lenders. After all, lenders want to make money from you, and knowing that you can’t get another Chapter 7 discharge for 8 years and have no debt makes you look pretty good!

In my clients’ experience, once you get your bankruptcy discharge, you will be deluged with offers for new credit cards, car loans, etc. Back when people actually had equity in their homes, I had many clients refinance their homes a couple of weeks after they got their discharges, or even in the middle of their Chapter 13 cases. Even in the current tight money climate, assuming your post-bankruptcy credit is good and you have a good job, you’re eligible for an FHA-insured mortgage two years after your discharge.

This isn’t always a good thing. I don’t want you to get right back in debt again. At first, the would-be lenders will want more money down and will want to charge you higher interest rates and fees. However, over time, if you are careful, keep your job, start saving money, pay your bills, and do things that will put good marks on your credit report, your credit scores will get higher, and the terms you can get will improve. In my experience, if a client has not reestablished good credit in 2 to 4 years–sufficient to buy a car or even a house–it’s not because they filed bankruptcy. It generally means that something else has happened after the bankruptcy to hurt their credit.

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Brett Weiss, a senior partner at The Weiss Law Group, 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 colleague, Daniel Press, 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 previous 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 and the Bankruptcy Bar Association of Maryland. He has 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.
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