Some people are hesitant to even consider the possibility of filing for bankruptcy because they think they will be financially ruined for the rest of their life. They worry that they won’t ever be able to get credit or own a home again. This is simply not the case, and a bankruptcy can often be the path to a brighter financial future.
The Short-Term Impact of a Bankruptcy
Immediately after receiving your bankruptcy discharge, there will be some financial consequences. You will not be able to immediately get a new mortgage or a car loan. However, your financial difficulties may have already made you a credit risk before bankruptcy, and receiving your discharge can put you on track to get a new mortgage or car loan in the future.
Depending on the type of mortgage, you may be eligible for a new mortgage loan between two and four years after receiving your discharge. You may have to pay higher interest rates, and you’ll need to continue to either maintain or improve your credit score as well, but you will have credit options if you stick to your financial plan.
You also need to remember that you won’t be eligible for a bankruptcy discharge for several years, depending on which bankruptcy chapter you file under.
How Bankruptcy Improves Your Financial Situation
While bankruptcy does have its drawbacks, the benefits are worth it for many debtors. You can receive a discharge of many types of debt, including credit card debt, medical bills, or most other unsecured debts. Not only does the discharge give you immediate and permanent relief from bill collectors, it puts you in a position to improve your credit score and financial situation long-term.
Eliminating some of your debt will free up income that you can use to pay off any remaining debt. When you’re no longer falling further behind on your payments every month, you can improve your credit score and set yourself up to use credit responsibly when it becomes available to you.
You can also use a bankruptcy as a wake-up call to change your financial behaviors. Knowing that you’ve been given a second chance causes some people to buckle down and start making disciplined financial decisions, which is why bankruptcy can be so beneficial.
Talk to a bankruptcy attorney about how filing for bankruptcy will impact your financial situation.
Bankruptcy is a complex and nuanced area of law. Contact the Law Office of Barbara B. Braziel to talk about your unique financial situation and how a bankruptcy could help you.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.