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What Happens After a Bankruptcy Discharge?

Kundan Pandey Nov 18, 2018
While a bankruptcy discharge may free an individual from the headaches of repaying debts, it is not as simple as it appears to be. Proper planning and awareness regarding the situation, once the process is complete, is necessary to avoid further financial pitfalls and invite endless woes.
You analyzed all bankruptcy alternatives but found that none could help you get out of your ever-increasing debts. Accepting the worst, you filed for bankruptcy. Consequently, you obtained a bankruptcy discharge. Now, you're concerned about its consequences.
Your worries will be eased once you understand this process, in which a debtor is released from any sort of personal liability to pay back all the accumulated debts he is entitled to repay.
Once the concerned judicial court has discharged several debts the debtor was supposed to repay, it orders all creditors not to force or communicate to the debtor to repay the debts. So, after the court's decision, you can feel relaxed and relieved from the mental burden you were carrying of repaying your debts.
However, it may take 7 to 10 years for you to get a good credit rating once all your debts have been cleared by the process. Instead of worrying about the future to make your credit score stronger, you can do it better many years earlier.

You're Free

Legally, you're free of any financial obligations, and credit card debt, utility expenses, medical bills, or loans. Legal freedom helps to focus on debts not excused like child/student loans, court costs, etc.

Work to Get New Credit

Six months after your bankruptcy filing (for Chapter 7 bankruptcy) or immediately after you're done with the repayment plan of Chapter 13 bankruptcy, you can work towards improving your credit.
In an attempt to build credit, you may go for the following options:
  • After bankruptcy personal loans
  • Home loans after bankruptcy
  • Unsecured credit cards after bankruptcy
While unsecured credit cards are a great tool to boost your credit rating fast, going for long-term loan options, like house loans, don't seem to be a very bright idea. Your whole focus must be to improve your credit score, so that you're able to have a good financial base.
Remember, loans are available, but do make it a point to be ready for the risk, in case you can't repay them this time. Chapter 7 and Chapter 13 bankruptcy can only be filed once in 8 and 4 years, respectively. This time if you mess with your finances, you will have no one to turn to. So, know what you're up to and only then proceed.
For getting a loan, you will have to explain to your lender properly, as to what led to your bankruptcy, and what lessons have you learned from it. While the general notion is that it is difficult to get loans after bankruptcy, there are several lenders who're willing to finance bankrupts, although they prefer to give short-term loans.
Inheritance after bankruptcy discharge can be tough, and you may have to give details of all your properties without concealing anything. It's not difficult to improve credit scores after bankruptcy.
Proper money saving tips and being frugal can help you to better your situation. You've got to be positive about the whole experience and keep working towards improving it.