What to Expect After Bankruptcy

 Posted on February 09, 2024 in Bankruptcy

Filing for bankruptcy can provide much-needed relief if you are overwhelmed with debt. However, it also brings significant changes to your financial life. It is ideal to know what to expect, and a Texas bankruptcy attorney can help you determine what life may be like in your specific situation.

The Immediate Aftermath

Once your bankruptcy is discharged, the calls and letters from creditors should stop almost immediately. The discharge order from the bankruptcy court prevents creditors from trying to collect on discharged debts. However, the discharge does not get rid of all debts. You are still responsible for domestic support obligations, some taxes, student loans, and any fraud-related debts. Creditors can resume collection activities if these debts are excluded from the bankruptcy. Within 30 days of the discharge, you will receive a notice outlining which debts, if any, were not wiped out by the bankruptcy. You will also get information about any property the bankruptcy trustee abandoned back to you.

Rebuilding Your Credit

While bankruptcy provides immediate debt relief, it also devastates your credit scores. After bankruptcy, it is critical to start responsibly using credit again to rebuild your scores. You can typically get a secured credit card right away. Use this to make small purchases that you pay off in full every month. Over time, this demonstrates that you can responsibly manage credit. As your scores improve, you can get additional credit cards. Continuing to use credit wisely will help rebuild your credit. You can also add alternative credit data to your credit reports, such as paying rent and utility bills on time. This helps offset the negative impact of the bankruptcy. Within a year of discharge, you may be able to qualify for an unsecured credit card, auto loan, or even a mortgage.

Watching Your Spending

Bankruptcy gives you a fresh start financially, but it is all too easy to fall back into bad habits. To avoid winding up in severe debt again, you need to closely monitor your spending and only buy what you can realistically afford. A budget is essential post-bankruptcy. Track where every dollar is going each month to get your finances under control. Limit spending on unnecessary expenses and avoid relying on credit cards that could trigger another cycle of spiraling debt. Bankruptcy Chapter 7 can only legally discharge debts once every eight years. So, you need to make changes to your financial habits to ensure you can pay your bills going forward and rebuild your savings. Consider meeting with a credit counselor or taking a personal finance course.

Contact an Arlington, TX Bankruptcy Lawyer

It can be challenging to navigate life after bankruptcy. A Forth Worth, TX attorney can answer legal questions, provide forms and paperwork, or assist you if creditors violate the discharge injunction. Bankruptcy can give you a chance to regain control over your financial situation. Call Acker Warren P.C. at 817-752-9033 for a free consultation.