What Comes After Bankruptcy?
By David S Caldwell
An estimated 1.5 million Americans declare bankruptcy each year. Unfortunately, many of those individuals fail to weigh the consequences
of bankruptcy before their filings. It is not an easy way out of
financial troubles, and there are many complications associated with it
that can be confusing to those declaring it.
There are two types of personal bankruptcies that an
individual may declare: Chapter 7 and Chapter 13. Regardless of which
chapter an individual files under, his or her credit will usually
suffer for 7-10 years, meaning that the individual will have limited
financial options for that time period.
Limitations Faced by Filers
Typically a bankrupted individual will not be able to:
- Take out a personal loan for debt relief or other uses
- Finance a large purchase, such as an automobile or home
- Use credit for any other reason he or she needs
Even if an individual's financial situation improves
during the 7-10 year period, creditors may remain wary of lending that
individual any money, as they see a bankruptcy declaration as a sign
that an individual has historically been unable to repay his or her
debts.
If a lending institution does decide to lend money to
a bankrupted individual, it will usually be at a very high interest
rate. Typically, the worse an individual's credit is, the higher the
interest rate that he or she will have to pay on borrowed money.
Fortunately, there are steps that filers can take during this period to
improve their credit scores. In addition, they may benefit in the long
term. Having a negative mark on one's credit score does not place one
in a hopeless situation.
If you or someone you love is facing the prospects of
bankruptcy, find out if you have other options from the experienced Boca
Raton bankruptcy attorneys of Eric N. Klein & Associates, P.A.
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Page Updated 2:03 PM Thursday 9/11/2014
