What Happens After Bankruptcy?
Many people file for bankruptcy after falling on hard financial times. Their hope is to improve their financial situation and get a fresh start. While some do, many fall into the same debt trap. Old debts disappear, but new ones come about, causing the cycle to continue.
In fact, the statistics regarding post-bankruptcy are depressing. Twenty-five percent of debtors are still financially unstable after bankruptcy. The cause is not credit cards, though. It’s the monthly bills such as rent, mortgages, car payments and utilities keeping people from getting ahead. What’s even more shocking is that more than 30% of bankruptcy filers actually see their finances worse off after the bankruptcy has been discharged. This is often due to less household income, coupled with job loss, illness or aging.
This means that for many people, bankruptcy can actually be a waste of time. While the process can stop debt collectors from harassing you for a period of time, the cycle continues once the bankruptcy has been discharged and the household is in debt once again. Also, bankruptcy filers tend to experience more short-term and long-term stress than those who never file.
Compounding this situation is the fact that bankruptcy filers are bombarded with loan and credit offers, making it easy to get back into debt again. Despite popular belief, predatory lenders are prevalent even after a bankruptcy filing. It is not uncommon for someone to discharge their debt and receive multiple offers for payday advances and car loans on a monthly basis. This may seem odd, but lenders know that many of those who are post-bankruptcy are just getting back on their feet and they sometimes need credit to pay for everyday essentials.
Keep in mind that you can file for bankruptcy multiple times in your life, although there are limitations. Once you file for Chapter 7 bankruptcy, you must wait eight years to file another one. To go from a Chapter 7 to Chapter 13 bankruptcy, the waiting period is half that, at just four years. Lenders know this and are looking for ways to extend credit to you while you wait.
While having some access to credit is a good way to rebuild your credit score following a bankruptcy, choose and use wisely. Most credit cards will have low limits and high fees involved. Some may even require a security deposit.
While bankruptcy comes with caveats, it can be a good option if you are drowning in debt and you are ready to make better choices with money. Credit counseling is a good start, as is creating and sticking to a budget. With a lot of effort, bankruptcy can be beneficial in the long run.
Contact a Coral Springs Bankruptcy Attorney
While bankruptcy often promises a fresh start, this does not always happen. Many people fail to learn better spending and saving habits, causing them to go into debt all over again.
Don’t let this happen to you. Learn from your mistakes. A Coral Springs bankruptcy attorney at the Law Offices of Barry S. Mittelberg, P.A. can assess your situation and provide you with resources that can help. Schedule a free consultation today. Call our office at (954) 752-1213.