Bankruptcy can offer you a fresh start. This is not an exaggeration. A significant amount of the advice out there talks about this very idea. Then they will explain how the process works and how to start. But what happens after you have successfully filed for personal bankruptcy? 

When you can start over financially, it is an opportunity. Take advantage of the second chance. It is possible to rebuild your credit in a few years—but it takes focus and work. Without knowing what this looks like, you might end up worse than when you began.

Let’s go over how to prevent that from happening. 

Your Credit Score Will Change

After you file for personal bankruptcy (Chapter 7, specifically), you may be surprised as to how long it may take for your credit scores to be impacted. But the first thing that happens is that you receive a bankruptcy discharge. These are as follows:

• Legal order releasing you from specific debts
• This prevents creditors from taking further action to collect the money you owed
• This also extends to credit agencies calling repeatedly and/or threatening litigation

It is important to note that some things won’t change after you file. You will still be required to pay your mortgage, student loans, and child support, among other things. 

In some cases, your credit scores might not change for 3 to 4 months after you receive your bankruptcy discharge. For any debts that you do not need to pay, you will see the words “discharged in bankruptcy.” 

As mentioned above, things such as your mortgage will not fall under this list. And even if there is a mistake where it is labeled as such, you need to change it. Your mortgage payments will need to be paid. Each one you make is your way of rebuilding your credit. 

Do Things Right

Establish a budget. Live by it. And this is going to require discipline. Ultimately, it will allow you to start seeing money differently. For instance, if you set aside $200 a month for food, how are you going to feel if you spend $100 at a restaurant? 

Although there are counselors and advisors available, making payments on time is going to bring up your score. There are loans specifically designed for this purpose. Here’s how they work:

• You borrow a small amount of money
• The money gets deposited into an account that you cannot access
• You use this money to repay the loan amount (plus interest). 

Other Considerations

Renting (and buying, certainly) will present hurdles. If possible, get situated before declaring bankruptcy and stay put until your credit improves. Otherwise, you might have to explain yourself to new landlords or put additional money down.

Hedtke Law Group

Bankruptcy is a difficult thing that can happen to good people. Unexpected challenges and obstacles put pressure on the debt that we are already carrying. At Hedtke Law Group, we want to help you get your fresh start. Contact us today to schedule a free case evaluation.