What Will Someone’s Financial Life Be Like After Filing For Bankruptcy?

A chapter 7 is a very short process which is over three months after filing so the person is debt free. If their budget was tight to begin with, then it will still be tight afterwards; it’s just that they will not have any debt problems. In a chapter 13, the rule is that the person only has to pay as much as they can afford and that is what people like about it. The flip side is that they have to pay as much as they can afford, which means somebody in a chapter 13 is always living on a budget and sometimes it is difficult to handle if something unusual comes up. This is why we always look at somebody’s income and expenses whenever any sort of issue comes up to see if they can absorb whatever they are dealing with.

People Will Be Living On A Budget For A Number Of Years, So Does Their Life Pretty Much Go Back To Normal?

Their life is back to normal once the plan completes and they make their last payment, because then there are no more payments and the person is out of debt.

After How Long Can Someone File For Bankruptcy Again If They Get Into Financial Trouble Again?

Someone who files a chapter 7 would have to wait for eight years before they could file again. It would be a much shorter timeframe if someone filed a chapter 13 but it would depend on whether or not the case was successfully completed. There would be a lot of different factors to look at if there had been a previous filing, especially in our area. Some of the judges like to set these for a hearing just to see if the other case is going to be successful. There are a lot of little factors to look at if there was a previous filing.

Do A Significant Number Of People File For Bankruptcy Again Or Are They Only Willing To Do It Once?

Bankruptcy is something that people really do not want to use. It is the tool of the last resort so we really do not see many people re-filing.

Are Creditors Obligated To Stop Calling And Harassing Someone After Filing For Bankruptcy? 

Once a person files for bankruptcy, a prohibition against the creditors contacting them goes into place automatically. The technical name for it is an “Automatic Stay”, because it automatically prohibits the creditors from contacting the person. If someone files for bankruptcy and then somebody calls, they just have to give him the case number and it should end right there. If somebody contacts the debtor in bankruptcy after the case is filed and they knew about the case filing, then that person could get in a lot of trouble. Typically, when somebody files bankruptcy, it ends all of the harassment they are getting, all the calls and the threats that are causing them to lose sleep. All of that stops once a person files for bankruptcy.

What Holds People Back From Filing In The First Place?

They hate the stigma that goes with bankruptcy, which is why it is the last thing they would ever want to do. Secondly, they are concerned about their credit and how they would ever recover from it. The fact is most people have debt problems, and if someone has debt problems and the house or car had not been paid and the credit cards have not been paid, then nobody is going to give them any new credit. They are just very concerned about what their credit would be like afterwards.

Also, most people have probably never really stepped back and taken a look at their income and expenses to really see what is going on. About 80 percent of the time when I meet with a couple in my office and go through the income and expenses, it is the first time they have seen it together. The average couple’s bills come in at different times of the month and they are paying those payments at different times of the month but they never take a snapshot to really see how much comes in during the month and how much actually goes out during the month and how much are the bills that are left to be paid. Sometimes they just do not want to look at it because they know there is a problem and they are just afraid to learn how big of a problem it is.

Do People Have Hesitations About Hiring You As The Bankruptcy Attorney And What Are Their Worries Or Concerns About The Process?

Some people are just not sure about using the tool of bankruptcy and some people still have a little bit of denial. They think they can somehow work through this, because they want to avoid the stigma associated with bankruptcy. It will make the person debt free but it is bankruptcy. A lot of people do not realize their credit will end up being a lot better after they are debt free, but it is just those uncertainties about bankruptcy and the fear of it that keeps people away from it.

Does It Actually Improve Someone’s Credit?

Yes. A person who is debt free looks better than somebody with $20,000 or $30,000 in credit cards that they cannot pay. They file for bankruptcy but their credit reports also show that they do not owe anybody. The person with no debt is a much better risk for a new loan than somebody who has $30,000 in unpaid credit cards. It might affect the interest rate and all that but the person would be able to get a loan.

A person has more risk of being denied a job because of bad credit and $30,000 in unpaid credit card bills than somebody who filed a bankruptcy 6 months earlier.  The person who is in debt and getting all these collection calls, who is at risk of losing their security clearance, getting calls from the creditors because they missed credit card payments, will face a lot of issues as compared to someone with no debt.

For more information on Life After Filing Bankruptcy, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling 210-930-7000 today.