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What to expect of your post-bankruptcy financial life

Thinking about filing for bankruptcy? You may attempt to separate myth from fact with respect to your financial life in the aftermath. Here are five areas of common concern and what you can reasonably expect to happen.

1. Changing account status

After bankruptcy, the status of your various accounts should change. Those discharged should appear as “included in bankruptcy.” Check your credit report periodically. Any accounts that are still listed as “past due” or “unpaid” are not current. You should contact the creditor and ask for an update to the information.

2. Vanishing delinquent accounts

Delinquent accounts are part of your credit history. Therefore, any that appeared on your credit report before bankruptcy will continue to show up afterward. These will drop off eventually, usually after seven years.

3. Attempts to collect

You are no longer legally responsible for any debt discharged in bankruptcy, but the creditor may still try to exact payment from you. Your bankruptcy attorney can file a motion with the court to stop this kind of continued harassment.

4. Ability to get credit

You may think that filing for bankruptcy protection prevents you from getting credit. However, you may discover how quickly you begin to receive applications for credit cards. You may want to pay with cash at this point, but having one card with a balance you can pay off each month could help you gradually improve your credit standing. You may also be able to get an auto loan or a mortgage; just prepare yourself for high fees and interest rates.

5. Your unique circumstances

You may believe that the credit score impact is the same for everyone who goes through bankruptcy, but this is not true. The level of impact depends on your individual credit profile. If, for example, you had a high FICO score prior to declaring bankruptcy, you will see a significant drop afterward. If you had a number of negative items in your profile, you will only see a modest post-bankruptcy drop in your credit score. 

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