Preparing for Life After Bankruptcy
Filing for bankruptcy is not the end of the world — nor is it the end of your financial vitality. Although your credit report may have been damaged and you’ll temporarily have a tough time getting a loan or credit card, there can also be benefits of going through bankruptcy. It can be a starting point for a new life and a more financially sound economic future.
The chapter of bankruptcy under which you filed dictates different time periods in which you must fulfill payments while under bankruptcy protection. For example, if you’ve filed for Chapter 13, you will be paying off your debts — known as reorganization. For three to five months, the court dictates a set amount for you to live on and a trustee divides the rest among creditors each month. The intent of the reorganization period is to make the process of paying off debts more manageable, and it can be essential to ensuring future financial success. At the end of reorganization, your debts are gone, but the fact that you filed for bankruptcy will stay on your credit report for 10 years.
One of the most important steps to take after bankruptcy is re-establishing credit. This can be a challenging a process, but the best way to do it is by being on time on your new obligations and payments — such as simply paying your mortgage. This also demonstrates that your overall financial health is improving. Over time, it is possible to rebuild your credit to the point it was at prior to bankruptcy.
Although it may seem as though bankruptcy is the result of failure, it can also be a positive experience and offer a new opportunity to relieve you and your family of financial difficulties. The more time that has passed, the less relevant the bankruptcy will become. For more information on bankruptcy and how it might affect you, consult a respected attorney in Los Angeles.