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Bankruptcy: Life After

Deciding to file for bankruptcy is an emotional and difficult time. It is something that many of us never saw in our future and something that leaves us with an uneasy thought of “what’s next” or “what’s going to happen to my future”.

Like many setbacks in life, there is always a chance to recover. There are many different roads to recovery one can take after filing for bankruptcy. Although for many, bankruptcy was filed because they were so far behind financially that the road to recovery seems almost invisible. The first step in regaining your life after bankruptcy is making a commitment to yourself to have positive changes financially so you do not end up back in this situation.

The first thing many wonder is if they will ever regain credit again following a bankruptcy. Good news is that answer is yes. Many banks now offer “secured” credit cards where a debtor puts up a certain amount of money, as little as $200, in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves their ability to pay the debt.

Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who have not filed for bankruptcy. More important than the fact that you previously filed for bankruptcy is your size of your down payment and the current stability of your income.

Now, the fact that you filed for bankruptcy will remain on your credit report for a maximum of 10 years, however that becomes less significant the more time that passes and the further in the past the bankruptcy becomes. And truth be told, you are probably a better credit risk after bankruptcy than before.

You can also start to rebuild your credit by taking the following steps:

Budget. Create a budget and stick to it. Learn to live within your means and do not spend more than you can comfortably afford.
Avoid Credit Card Debt. If you use a credit card after bankruptcy it is important that you only charge as much as you can afford to pay back. If you only make that minimum payment every month you can get yourself back into that hole.
Refinance Loans. If you take out a high interest loan after you filed for bankruptcy try to refinance that loan a year or two later.
Make payments on time. Paying your bills on time will help boost your credit score and can show potential lenders that you are committed to becoming financially responsible.
Installment Loan. Getting an installment loan, such as a car loan, can help improve your credit. You may have to pay a higher interest rate but will improve your credit if you make those monthly payments.
Monitor Credit Report. You are entitled to one free credit report from each of the three credit reporting agencies. Check for errors that may inhibit your ability to rebuild.

Now these all seem like simple, no brainer tips. But they do help and are very important to keep in mind.

It may also be a good idea to engage in a financial advisor to be your personal counsel. You’ll also want to work on creating a savings account, rainy day or emergency fund. Unfortunately you will have unexpected financial burdens come up and this untouched cash can help lessen the dent when something does happen post bankruptcy.  Try to place at least a few percent of each paycheck into a savings account.

Once you practice good habits, there is no reason that you shouldn’t be able to regain your life after bankruptcy. When well planned & executed, a bankruptcy can be a temporary, not a permanent, setback. Scottsdale Law Group understands how intimidating the bankruptcy process may seem and the stress that overwhelming debt can cause to individuals and their families. Working together as a team, Scottsdale Law Group and the debtor can successfully navigate the bankruptcy process, attain the debt relief that the law makes available to everyone, and begin the process of rebuilding the debtor’s credit securing their financial assets. For more information about Scottsdale Law Group, please visit http://www.scottsdalelawgroup.com.


Scottsdale Law Group is a law firm that brings together both legal and experienced transactional professionals to focus on legal matters associated with widespread real estate negative equity, government sponsored residential loan programs, property short sales, and bankruptcy protection. It is an industry leader in successfully processing, managing and achieving settlement offers with lenders and short sale transactions. To learn more about Scottsdale Law Group and the services it provides, please visit www.scottsdalelawgroup.com.
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