Life After Bankruptcy

The average person considers filing bankruptcy for years before they actually file. They take years to decide, because they are worried about the effects the bankruptcy will have on their financial life and everyday life.

It's easy to understand why they are concerned. There is a lot of bad information about bankruptcy on the internet.

In this discussion, California bankruptcy lawyer Karen Ware answers frequently asked questions about bankruptcy to dispel some of the common myths about life after bankruptcy.

When can I get a vehicle loan after filing bankruptcy?

If you file a Chapter 7 bankruptcy and discharge your unsecured debts, you become a debt free person — which is very rare.

Consequently, many vehicle lenders actually market to people emerging from bankruptcy. They know you can't file Chapter 7 bankruptcy and receive a discharge again for eight years. They also know you are a debt free person and want to rebuild your credit.

Vehicle lenders like the odds, which favor you repaying the loan. The interest on the auto loan might be on the high side, so you should use financing only if necessary. But, it is likely you can get auto financing if you need it.

When can I rent an apartment after filing bankruptcy?

Several of our clients had unexpected job transfers in the middle of their bankruptcy cases. They reported being able to rent a new apartment fairly easily, even though they had very recently filed bankruptcy.

After you actually complete your bankruptcy, it should be even easier to rent a new apartment.

As with financing a new vehicle, landlords know that recent bankruptcy filers are debt-free people (or soon will be, if you are still waiting for your discharge). They like the fact that you are very likely to pay your rent because you (1) want to rebuild your credit, and (2) have few or zero debt payments competing for your resources.

When can I get a mortgage after filing bankruptcy?

To qualify for most conventional mortgages, you need to be two years past your bankruptcy filing date.

How long will it take for my credit to bounce back after filing bankruptcy? How can I speed up the process of improving my credit?

The typical life cycle of a FICO credit score during bankruptcy is: (1) FICO score goes down about 30-50 points when you file bankruptcy. (2) FICO score goes back up 50-75 points once you receive your bankruptcy discharge. (3) FICO score goes up significantly (100-150 points) after you reach the one-year anniversary of your bankruptcy filing.

To speed up the process, you can apply for one or two low-credit-limit credit cards or a secured credit card. The key is to not charge up the card, but only use it once or twice per month and then immediately pay it off.

Will bankruptcy affect my ability to get a new job?

Many prospective employers do not review applicants' credit scores or reports. So, your credit would not be an issue for these employers.

Private sector jobs dealing with money (such as an investment advisor position) might be difficult to get immediately after filing bankruptcy. But, having a large amount of debt also makes these jobs hard to get. In those situations, the bankruptcy is actually a step in the right direction. In time, these potential employers will see you as a debt-free person. That will be a point in your favor during the interview process.

I rely on my credit cards to pay emergency expenses. How will I manage emergencies after my credit cards are closed during my bankruptcy?

When you file bankruptcy, your credit card accounts will be closed by the creditor. But, you will also stop making monthly payments on the cards.

Freed from the burden of monthly credit card payments, bankruptcy filers often find they have a small budget surplus each month. They can use these funds to build an emergency fund.

How can I get help filing bankruptcy?

Call The Law Offices of Karen Ware PC at (805) 284-0760 or (818) 668-9019 to complete a free consultation and discuss how bankruptcy might affect your individual situation. You can also use our scheduling tool to schedule a free consultation online.