Life After Bankruptcy

Life after bankruptcy can be better than ever

The Intangible Changes

For some, the concern over what will happen after bankruptcy can make them hesitant about the entire process.  They worry about how their credit score will be affected and whether they will ever again be able to obtain a car loan or qualify for a mortgage.  But those concerns are soon overshadowed by the extreme relief that they feel after bankruptcy.  When my clients tell me how bankruptcy has changed their lives, it is the sense of peace and quiet that amazes them, how having the stress over financial problems gone and no more pressure from creditors has made them free to enjoy the other things in life; family, friends, and hobbies.  Bankruptcy is very much a life-changing experience – financially and emotionally!  And that is one experience you can’t put a price tag on.



Credit Bureau Issues

The impact of bankruptcy on your credit is not necessarily all you’ve heard it will be.  Yes, the filing will remain for 10 years on your credit report and you may have some issues when it comes to certain types of insurance or getting a job in finance, but bankruptcy in no way means you won’t be able to get a loan.  Believe it or not, you will actually be a more desirable candidate for some loan agencies and car dealerships.  Sound strange?  Think of it from their viewpoint: you have recently declared bankruptcy, which means that you cannot file again for 8 years.  The average car loan lasts much less time than that, so they know they are going to get their payments.  So, you should be able to get a loan, but beware – they are likely to come with a pretty high interest rate because of your past credit problems.

Improving Your Credit (FICO) Score

There are definitely some good options for raising your credit score after bankruptcy, getting you on the road to better loan interest rates.  The first thing you will want to do is to obtain your credit report around 3 months after your receive your discharge order, then read it carefully to ensure each and every debt is recorded as discharged in bankruptcy.  While creditors are required to update your account with any changes, they don’t always comply as promptly as they are supposed to.  If this happens with any of your former creditors, it is unfortunately your responsibility to file a dispute (just follow the instructions on the credit report) to get these debts corrected.  As soon as the change is made, you will see your score go up.

While this may sound strange, another action you can take to restore good credit is to have at least 3 loans with different creditors, preferably different kinds (perhaps one is a furniture store, another a credit card, maybe a car loan for the third) so that you can begin building a report that shows on-time payments.  When you are doing this, just be sure you can afford the things that you buy, or else you risk falling behind on payments and harming your credit score even more, and possibly even ending up right back in bankruptcy court.

These are just a couple of methods for rehabilitating credit that has worked very well for my clients.  I have seen such stunning results as witnessing scores jump from the low 400 range to high 600 in only 2 years after filing bankruptcy.  And if they can do it, so can you!

Check out my website at for more information on how to get a loan that boosts your credit score.

Utah Bankruptcy Clinic
699 E. South Temple, Suite 201F
Salt Lake City, UT 84102