Life After Bankruptcy May Be Better

Bankruptcy has a bad reputation for ruining lives. Truth be told, if you're considering bankruptcy, life may not be that great right, especially where your finances are concerned. But, bankruptcy's negative reputation might keep you from filing even though it could be the best solution for your debt. For some consumers, life is actually better after filing bankruptcy.

Once you file bankruptcy, you’ll get an automatic stay from most collection activity. That means that many of your creditors will have to stop calling you and sending letters. That alone can help you breathe a little bit easier. You don’t have to dread checking the mail or answering your phone. If any creditors are currently garnishing your wages, that garnishment will have to stop. And a pending foreclosure or repossession may be stopped, depending on where you are in the process.

You’ll see more of your paycheck after you finish bankruptcy, especially if you were having your wages garnished prior to the bankruptcy or if you just completed Chapter 13 bankruptcy. Having more of your income lets you accomplish other important financial goals, like building an emergency fund, saving for your kid’s college, or saving up for your own retirement.

After a Chapter 7 bankruptcy, you’re virtually debt free. Certain types of debts, like student loans and child support, are difficult or impossible to have discharged in bankruptcy. But, most consumer debts, like credit card debts and personal loans, can be discharged in just a few months. After the bankruptcy, you might be completely debt free, depending on what types of debt you have.

Even a Chapter 13 bankruptcy can also leave you in a better position. While you will have to pay some debts over a three- to five-year period, most consumer debts that remain after that time are wiped out.

Bankruptcy might be a welcome relief to the pressure of having so much debt. If your bills have been causing tension and fighting in your home, filing bankruptcy can help restore peace. You and your spouse can file bankruptcy together if both of you have debts that you want to be discharged. Or, either spouse can file alone if only one of you has debt. Talk to a bankruptcy attorney to decide which is the best option.

You’ll get a much-needed break from borrowing since creditors aren’t typically too willing to extend credit cards or loans to someone fresh out of bankruptcy. That’s often touted as one of the bigger drawbacks of bankruptcy, but a credit hiatus gives you time to get used to living solely on your income. You can spend that time getting your finances on track, living according to a budget, and saving up for big purchases that you previously would have charged.

Filing bankruptcy can give you a second chance to do things the right way. Learn from your debt experience and bankruptcy filing. Reflect on what happened that led you to get into debt and vow to do things differently after bankruptcy.

You may be able to get new credit in as few as 12 months after bankruptcy. Be smarter with your post-bankruptcy credit cards and loans. Borrow only what you can afford and pay back what you borrow as quickly as possible.