After a long bankruptcy process, you might be both relieved and anxious when your debt is discharged, and your bankruptcy is finalized.
While the debt might be gone, you can be wondering, “Now what?”
What is my financial future? Can I apply for new credit? Will I forever be tarnished by my bankruptcy?
We are here to tell you to relax and enjoy the moment.
Bankruptcy is the beginning of a debt-free life, not the end of the line for your future.
Pay Non-Dischargeable Debts
One of the first steps you will need to take post-bankruptcy is to determine if you have any debts that were not discharged during your bankruptcy. While most of your credit card bills and other debts were likely discharged, if you owe on a student loans, certain back taxes, or if you’re late on child support or spousal support payments, those will still need to be paid if you filed Chapter 7 bankruptcy. Failure to make arrangements to pay for these debts can result in collections, and it can be noted on your credit report.
If you filed Chapter 13, some of those debts were likely taken care of in your repayment plan. Consult your bankruptcy attorney and your trustee to ensure you do not have any outstanding debts.
Pay Reaffirmed and “Ride Through” Debts
If you kept your car through a Chapter 7 bankruptcy and reaffirmed the debt, you should continue to make the car payment and keep the insurance up to date. If you do not pay a reaffirmed debt and, for instance, your car is repossessed, you will be subject to collections for the repossession charges just as if the bankruptcy did not happen.
In many districts, although you continue to keep paying your mortgage payment through a bankruptcy, the debt against you personally is discharged (…and, no, you do not get a free house) but the debt remains attached to the home and land itself. So if you intend to keep your home, you continue to pay the mortgage, taxes, and insurance (and junior liens if there are junior liens).
You will also need to ensure you now stay up to date with your upcoming loan and support payments to avoid accumulating more debt.
Start Rebuilding Your Credit
Your next step is to start rebuilding your credit by getting credit cards or small loans to establish a pattern of on-time payments. This might seem counterintuitive, as you just got out of debt, but the key is to be careful. You can improve your credit score by securing lines of credit and showing that you can repay your debt on time. However, it’s important to only use it on small purchases and to pay off whatever you charge immediately. This will help you avoid falling back into debt.
My office will place you in a credit score rehabilitation program after the bankruptcy is completed as part of your bankruptcy case once the case is completed. My clients who do all of the work through the program report excellent results. Building your credit is very much like going to the gym: If you go one day, it’s not likely to do much, but if you go consistently over time, the benefits will add up quickly.
If possible, avoid debt al together. There are many methods out there on how to life a debt free life. You should examine all of the ways do to so and work daily to save and live below your means.
One of the biggest steps to take post-bankruptcy is to avoid the pitfalls that got you into debt in the first place. You will need to use diligence and not open too many credit cards or take out too many loans.
You also need to watch how many cards and loans you’re applying for, as each application can impact your credit score.
Another tip is to avoid late payments. You will need to stay up to date with your monthly bills. This will help you avoid late fees and will also help your credit rating by showing you can make on-time payments. A tip to ensure your payments are on time is to set up automatic payments.
To be candid, we are socialized into accepting debt as a way of life. Do not fall for this trap. The vast majority of us needs debt for three major purchases – a home, a vehicle, and an education – and at least two of these can be done with consistent long-term planning and hard work without going into catastrophic debt.
I encourage to focus on living debt free in your future to the extent possible. Turn off the debt advertisements of the buy now pay later mentality and pay for what you need and want. A great quote from a motivational speaker heard was “you can have anything you want in life if you pay for it in full before you get it.” These are debt-free words to think about.
Famous People Who Filed for Bankruptcy
If you think bankruptcy is the end of the road for you, just think about these successful celebrities that filed for bankruptcy. They moved on with their lives, and you can too!
You might even be shocked by some people on this list, like:
- Kim Basinger
- Toni Braxton
- Zsa Zsa Gabor
- Larry King
- Cyndi Lauper
- MC Hammer
- Meat Loaf
- Willie Nelson
- Abraham Lincoln
- William McKinley
- Walt Disney
- Henry Ford
- Lenny Dykstra
- Dorothy Hamill
- Mike Tyson
- Johnny Unitas
Remember, your bankruptcy discharge is the end of the past and the start of a new beginning. The only thing stopping you from your future successes is you. Don’t let the bankruptcy or yourself hold you back.
Let Us Help You
Don’t let debt wreck your financial future. Let our lawyers at The Law Offices of Alexzander C.J. Adams, P.C. review your options with you and help you decide if bankruptcy is the right option for you. We work for you, the people, and not institutions. Contact us for a free case evaluation, or no-obligation consultation. We are dedicated to helping you overcome this small bump in the road and assisting you to get on with your life.