Life After Bankruptcy
It’s never easy to file for bankruptcy and it’s guaranteed to have a tremendous impact and effect on your life. Although it’s distressing and there’s a heavy stigma attached to bankruptcy, it’s important to understand that life does go on after filing for bankruptcy. Millions of Americans successfully file for bankruptcy every year and end up back on their feet. In some cases, debtors become more prosperous after bankruptcy because they can finally pursue their goals without the burden of unforgiving debt.
The negative connotation surrounding bankruptcy is that it implies you cannot handle your finances or you’re trying to cheat creditors by scamming the system. However, this is nothing more than a myth. Many average people of different backgrounds file for bankruptcy for a variety of different reasons, most of which are very common. So, you don’t need to fear filing for bankruptcy because of what the future may hold. In fact, filing for bankruptcy could save your finances in the long run. There will of course be obstacles and life after bankruptcy isn’t always easy, but the benefits of discharged debt are enough to overcome them.
Bankruptcy Attorney in Cincinnati, Ohio
If you are thinking of filing for bankruptcy and want an in-depth analysis of your finances, get in touch with the experienced and skilled attorneys at Steiden Law Offices. Eric Steiden and his team have over 26 years of experience helping individuals, business and families file for bankruptcy with success. We understand that our clients are extremely stressed and pushed beyond their financial means. For that reason, we ensure to provide the utmost care and attention to our clients by responding to their concerns quickly and effectively.
You can contact Steiden Law Offices at and set up your first consultation free. At the consultation we can review your finances and any other relevant information to determine what the next best step is for you. Our firm has two offices in Cincinnati and two locations in Northern Kentucky, which can be located in the cities of Covington and Florence.
Steiden Law Offices accept clients throughout Ohio including Hamilton County, Butler County, Clermont County, Greene County, Preble County, Clark County, Brown County, Adams County, Warren County, Clinton County, Montgomery County, Darke County, Highlands County, Highlands County, Miami County, Shelby County, Champaign County, Lawrence County, and Scioto County, Ohio.
Counties we accept clients in Kentucky include Grant County, Pendleton County, Bracken County, Robertson County, Mason County, Kenton County, Boone County, Campbell County, and Gallatin County.
Life After Bankruptcy in Ohio:
- How to Rebuild Credit After Bankruptcy
- Obtaining Credit After Bankruptcy
- Can I Qualify for a Mortgage After Bankruptcy?
- Additional Resources
How to Rebuild Credit After Bankruptcy
Once your bankruptcy case has ended, you will finally be able to rebuild your credit. Although the process is long and sometimes arduous, if you are diligent and make it a priority you can expect your credit score to raise significantly. It does take some time, patience, and financial planning but it’s much better to begin rebuilding your credit after bankruptcy rather than avoid the credit system altogether. This is a mistake many people make after bankruptcy because they are fearful of credit and swear to never use it again. The only way to remedy a low credit score is to rebuild it over time. So, the longer you wait the lengthier that process is.
You should expect your credit score to drop by at least 200 points after filing for bankruptcy. Your bankruptcy will appear on your credit profile for 10 years after filing for Chapter 7 bankruptcy. If you filed for Chapter 13 bankruptcy, then it should remain on your record for seven years. Having a bankruptcy on your credit profile isn’t desirable, but it doesn’t mean you can’t obtain credit. Some lenders who are sensitive to people struggling with bankruptcy will make exceptions and will still extend a loan to you. Although these lenders tend to have high interest rates, there are still many credit opportunities for people struggling with bankruptcy
After your bankruptcy has been resolved, it’s important you check your credit report with credit firms such as Equifax, Experian and TransUnion as soon as possible. It’s very common for creditors to fail and update credit reports after a bankruptcy case has closed, so it’s imperative you stay on top of your credit to ensure there are no inaccuracies. Once you’ve confirmed your credit report is accurate, you can rebuild credit by doing the following:
- Paying Bills Promptly – It might seem like common sense, but it’s essential you pay your bills on time after bankruptcy. This is one of the most effective ways to rebuild your credit. If you have many late payments and charge offs after bankruptcy, credit card companies may think you’re an untrustworthy borrower.
- Avoid Overspending & Stick to a Budget – One of the most common ways debtors become bankrupt is because they overspend and don’t pay attention to their finances. To avoid this, it’s highly recommended you closely examine your income, expenses and design a budget to stick to after your bankruptcy case is closed. It might mean cutting out some assets, clipping coupons, and dining in more, but if you live within your means you can avoid a lot of financial struggle.
- Apply for a Car Loan or Line of Credit – Although it might seem counterintuitive, it’s common for people to apply for a car loan or a line of credit after bankruptcy. Having various types of credit is important when rebuilding your credit score, so taking out a car loan or line of credit can positively contribute to your credit recovery. Be sure to only get a car loan or line of credit if you can afford to make the monthly payments.
- Have an Emergency Fund or Savings – Smart spending and saving habits begin with resisting the temptation of spending your whole paycheck. Instead of living paycheck-to-paycheck, invest in an emergency fund. You can use this chunk of cash in case your car breaks down, your child is sick, you lose your job or any other emergency that could come into your life. Having at least three to six months of living expenses could save you a lot of stress and heartache in the long run.
Obtaining a Credit Card After Bankruptcy
Many people who have undergone bankruptcy swear off credit cards forever. Often, they feel as if their credit is damaged beyond repair and fear they will never be approved. Fortunately, this is far from the truth. Many people can obtain a credit card after bankruptcy and doing so is not incredibly difficult. In fact, it’s highly recommended you obtain a credit card after bankruptcy so you can begin rebuilding your credit.
Before obtaining a card, we suggest you receive a copy of your credit report from Experian, Equifax and TransUnion. Review each of these reports and find any incorrect information such as discharged debts that may have not been removed. After you’ve checked your credit, you can research the various credit cards available to you and select the one that charges a reasonable annual fee. Once you’ve chosen a card, be sure the credit card company reports to Equifax, Experian and TransUnion. If they fail to do so, then you won’t reap the benefits of improved credit by using your card responsibly.
Another piece of advice when applying for credit cards after bankruptcy is to avoid unsecured credit cards altogether. These types of credit cards are riskier because when you make a purchase you are basically borrowing money from the credit card company and paying interest until you pay back what is owed. The problem with these types of cards is they have high interest rates or a low introductory interest rate that quickly skyrockets over time. Not to mention the fact that unsecured credit cards may charge you monthly fees on top of your annual fees.
Using a secured credit card is a much smarter idea after bankruptcy. With a secured credit card, you deposit money into a savings account in order to use it. That way you aren’t spending money that you don’t have and run the risk of missing payments. You can also opt for an unsecured credit card with a credit limit at a percentage of your deposit. That way you can still restrain your spending and set a limit you are comfortable with.
Can I Qualify for a Mortgage After Bankruptcy?
It’s a common myth among people that if you file for bankruptcy you will never be able to qualify for a mortgage. Depending on the type of debt relief option you chose, you may be able to obtain a mortgage after a certain waiting period. The chances of getting approved will heavily rely on your credit and if you had a chance to reestablish it after bankruptcy.
The waiting periods for securing a mortgage loan will depend on the loan you’re applying for and the type of bankruptcy you filed. Here is a brief overview of the various types of home loans available and the waiting periods associated with them.
- VA Loans – The Department of Veteran Affairs offer VA loans to veterans who have served a minimum of 181 days of service during peacetime, 90 days of service during war time, or six years of service in the National Guard. You must wait two years after Chapter 7 bankruptcy before you can apply for a VA loan. If you filed for Chapter 13 bankruptcy, then you can apply for your VA loan as soon as your bankruptcy has been discharged.
- USDA Loans – If the desired property is in a rural area, you could be eligible for a loan from the United States Department of Agriculture or USDA. You can file for a USDA loan after three years of receiving a discharge for Chapter 7 bankruptcy. If you filed Chapter 13 bankruptcy, then the waiting period is only one year. However, some can have their USDA loan approved during Chapter 13 bankruptcy.
- FHA Loans – Loans from the Federal Housing Administration are referred to as FHA loans. In order to be approved, you must wait two years after Chapter 7 bankruptcy. If you filed for Chapter 13 bankruptcy, then you must wait a period of one year.
- Conventional Loans – Mortgages that aren’t insured by the government or by a government entity are conventional loans. You must wait four years after Chapter 7 bankruptcy to apply for a conventional loan. The waiting period for Chapter 13 bankruptcy is two years. Some individual lenders will have different waiting periods within their policies.
FTC | Credit Repair: How to Help Yourself – Visit the official website for the Federal Trade Commission and learn more about credit and ways to rebuild/reestablish it. Access the site to learn your rights as a borrower, reporting accurate negative information, what the Credit Repair Organizations Act is and where to find legitimate help.
Credit Reports and Scores – Visit the official website for the U.S. Government to learn more about our credit report system. Access the site to learn the basics of credit reports, scores, freezes and what to do when you find errors on your credit report.
Ohio Debt & Bankruptcy Attorneys in Cincinnati
Are you concerned about your credit after deciding to file for Chapter 7 or 13 bankruptcy? Are you unsure if the benefits of bankruptcy outweigh all the negative consequences associated with it? If the answer is yes, then we suggest you contact Steiden Law Offices for informative and trustworthy legal advice on your situation. Eric Steiden has been a reputable bankruptcy lawyer in the Ohio and the Northern Kentucky area for over 26 years. He can use his resources, skills and knowledge to analyze your finances and put you on the best path to financial recovery.
Get in touch with Steiden Law Offices by calling or submitting an online contact form today. We will evaluate your case and set up your first consultation with Eric Steiden free. Steiden Law Offices accepts clients throughout the greater Northern Kentucky and Southern Ohio area including Kenton County, Boon County and Hamilton County.