Bouncing Back From Bankruptcy

I get this question all the time: “How do I bounce back after filing bankruptcy?”

First, the die-hard bankruptcy proponent living in me would challenge the premise of the question; the premise being that bankruptcy is something negative that needs to be bounced back from. I disagree with that premise! Most of my clients that file chapter 7 and/or chapter 13 bankruptcy are filing bankruptcy after having spent years with bad credit scores, and mounting debt balances that are ruining what’s left of their credit. Bankruptcy is the opportunity to stop that bleeding, to stop the downward trend of your credit score, and give you an opportunity to build your credit with a fresh start; without all the negative balances that are pulling down your credit.  Thus, bankruptcy is actually the first step in rebuilding your credit, in my opinion. Filing bankruptcy is you “bouncing back” from the debt of the past.

That being said, I do understand the question of, “How do I bounce back after filing bankruptcy?” So I will do my best to answer that below:

Filing bankruptcy is almost certainly going to give you more disposable income for your budget. Following a chapter 7 bankruptcy, you will no longer have credit card debts, medical debts, unsecured loan repayments, etc. Thus you should have more disposable income to live a better, more comfortable life. Similarly, if you file a chapter 13 bankruptcy, it’s very likely that your monthly expenses are going to decrease substantially (take a look at the chapter 13 example case). Obviously, this frees-up more of your income for other necessary living expenses that can improve the quality of your life!

The actual act of filing bankruptcy is likely to lower your credit score by the mere fact that you filed, yes, BUT bankruptcy truly is (or, at least, can be) a “one step back, two steps forward” situation. So when the case is complete, your debt will be gone, and you will have a much better opportunity to build your credit going forward. And how do you safely and effectively build your credit? The short answer is to make sure you’re paying all your bills in-full every month. But to be more specific, one relatively safe way (among many others) is to open a secured credit card, and make sure you pay off the balance every month. Another is to ensure your car payment fits easily within your budget to make sure you don’t fall behind. Charge only small amounts to your credit cards (like maybe just the gas to your car) to make sure you can pay it in-full every month. You’re more likely to be able to do this if your old debts are gone or substantially reduced by filing a bankruptcy.

I definitely understand this is much easier said than done.

I truly believe that for many people bankruptcy is the BEST FIRST STEP in rebuilding your financial life. It will give you the fresh start, the blank slate, the financial freedom to improve your credit, and quality of life into the future.

Having trouble keeping up with your budget? At the very least, reach out to me for a FREE consultation on the topic. Call/Text/Email Bankruptcy Attorney Lucas Ruffing with any questions.

-Lucas Ruffing
Attorney
740-815-1114
LucasRuffingLaw@gmail.com