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Life after a Chapter 7 bankruptcy filing

Chapter 7 bankruptcy, though its intention is to give the filer a fresh start, can often feel like someone has hit the “failure” button on your life.  When you’ve worked as hard as you could to fix things on your own, but are simply unable to make ends meet, feelings of helplessness and defeat can often sneak in.  However, life is not over after filing bankruptcy.  Actually, quite the opposite is true.  Most filers end up a few years down the road much better off than they would have ever been without filing.

Re-establishing credit after receiving a Chapter 7 discharge is not as hard as one may think.  First of all, lenders know that if you were just discharged, then by law you cannot file Chapter 7 again for at least 8 years.  Therefore, if they choose to offer you vehicle financing for a five year period, their debt will be paid in full before you are ever eligible to file again.  Also, if all of your debts have just recently been wiped out, you likely have more expendable income and can easily afford to make your monthly payments.

There is never a more important time to make sound financial decisions that when you are fresh out of any bankruptcy.  The next two years will make or break your credit score going forward.  Consider getting a secured credit card, and paying it off each and every month, on-time and in full.  This will help increase your score on a consistent and steady basis.  Mismanaging credit during this critical time period will show lenders that you are likely to file bankruptcy again.  This causes them to deny loan and credit applications. The ball is now in your court, and it is time to prove your post-bankruptcy creditworthiness.

The bottom line is that life goes on.  How it will go on financially is up to you.  Chapter 7 bankruptcy wipes your financial slate clean, and will even let you keep your house and car if you stay current on the payments.  The bankruptcy itself will remain on your credit report for 10 years, but positive progress will soon override its effect.


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