Bankruptcy is an intimidating prospect, without a doubt. Like many people who have reached this juncture, you may feel overwhelmed, wondering when you lost control of your finances and how you could have done things differently. You worry that your credit and reputation have been permanently damaged. Can you still get a loan to send your child to college? What about buying a house or car? Will this hurt your children’s credit as well?
Bankruptcy isn’t the end — it’s the (new) beginning!
Think of bankruptcy as a big reset button for your financial life. You pressed this button because your debt became overwhelming for whatever reason. You are hardly alone, as the estimated 1.2 million Americans who filed for bankruptcy in 2012 can attest. Rather than continue to be harassed by creditors for payments you just could not make, you decided to take the responsible step of filing for Chapter 7 or Chapter 13 bankruptcy protection.
Responsible? You bet! Rather than allow your family to lose their home to foreclosure or stall and lie to creditors, you chose to take the necessary action to recover. If you followed a Chapter 13 plan, you repaid at least some of your creditors to the best of your ability. And if you took Chapter 7, you’ve sacrificed some of your possessions in order to settle whatever debt you could. Irresponsible would have been allowing a bad situation to drag on, hurting yourself, your family and those you owe. Now you can focus on regaining control of your finances and rebuilding your credit, and your reputation.
Your credit rating can improve even with a bankruptcy on your report. Discuss options for rebuilding your credit with your attorney, such as securing a low-balance credit card and making regular payments to show you are capable of meeting your obligations. You may be surprised how eager credit card companies are to offer you a new card after bankruptcy. Don’t be afraid to take advantage of one or two of these offers, but be careful not to fall back into any negative patterns with regards to missing payments or charging more than you can afford to repay.
The best thing you can do for your kids is let them learn from your situation. As they enter adulthood, your past credit woes will not be reflected on their credit reports, so your financial “sins” will not be visited upon the next generation. By teaching your kids how to save, use credit cards responsibly and live within their means, they can build solid credit that allow them to obtain student loans and other financing.
Loans, mortgages and more are also not beyond your reach after bankruptcy. By taking steps to rebuild your credit, getting or continuing work, building up your savings account and avoiding excess debt, you demonstrate that you are still a risk worth taking.
Still worried? Talk to your Pennsylvania bankruptcy attorney about life after Chapter 7 or Chapter 13. You will see that the future looks a lot brighter now that you’ve been granted a fresh start.