Recovering From Bankruptcy: What You Need To Know

It's possible to have a full financial life after a bankruptcy filing.

For some, bankruptcy may seem like rock-bottom. They envision bankruptcy as an absolute last resort, a sign of failure, or the proverbial end to their financial lives. Thankfully, this simply isn't the case. Bankruptcy isn't an end. Instead, it is actually a fresh start. It wipes the slate clean, allowing people to begin anew to rebuild their credit after a period of late payments, discharges or write-offs.

If you are considering filing for bankruptcy, you may be worried about the long-term impact. You may fear that you won't be able to ever again get a mortgage, finance a car or apply for a new credit card. These fears are, in a word: wrong.

It is possible to both get the financial assistance bankruptcy offers and still reap the benefits of a positive credit history. It will take time - and patience - but things go faster than many people realize.

How long until I can get a mortgage?

Many people are surprised to realize that they are able to either get a new mortgage or refinance an old one as soon as a year or two after a Chapter 7 or Chapter 13 bankruptcy filing. Not only does a bankruptcy discharge your existing debt, it frees up disposable income to allow new purchases. Shortly after a bankruptcy, you may end up paying more for a mortgage in terms of a higher interest rate, but it is still possible. The same will be true of a refinance. If you qualify, your interest rate might be higher than people with a better credit history, but it could still end up saving you money in the long run.

What's the waiting period to be able to get a car?

Typically, a bankruptcy filing will only impact the ability to finance a new vehicle for a relatively short time, about a year or two. This is just for a dealership that doesn't offer self-financing, though. For those dealerships that finance on site, the waiting period might even be less. Again, the bankruptcy will likely have an impact in the form of a higher interest rate or slightly higher monthly payments, but it is still helpful toward rebuilding a positive credit history.

When can a bankruptcy come off my credit report?

This question is a bit harder to answer. A Chapter 7 filing usually stays on the filer's credit report for 10 years, while a Chapter 13 is automatically deleted after only seven years. These are only the maximum timeframes, however. It may be possible to, upon request, have a bankruptcy filing removed sooner if there are any deficiencies or incorrect information in the reporting.

As you can see, bankruptcy is not the so-called "life sentence" that some people fear it to be. A bankruptcy filing gives you a chance for financial freedom from debt that you'd otherwise be stuck with for years or even decades down the road. To learn more about whether bankruptcy is right for you, speak with a qualified attorney at Marcus H. Herbert and Associates. The firm helps people throughout western Kentucky and southern Illinois facing financial hardship. Call their Paducah law office toll-free at 866.702.8933 or contact them online today.