There are scores of inaccurate beliefs about what happens to someone after they’ve received bankruptcy protection. What people read on the Internet, hear from friends and family, see in advertisements from “tax repair” services, “credit repair” services, “debt consolidation” services and the like is often (at best) misleading or misinformed, and (at worst) downright criminal.
Here are three common questions about life after bankruptcy.
Q: Will I be living off cash? How will I buy a car?
A: There are a couple of local lenders who specialize in car loans to people in open Chapter 7 bankruptcies, so car loans can be had — but the paperwork and process is burdensome, and the price is high. Many lenders will loan to Chapter 13 debtors during the five-year period their case is open, assuming the trustee has given permission for the loan and the Chapter 13 debtor has the income or other ways to make the payments.
Q: Is it true there’s a fat chance I”ll ever get another mortgage?
A: This is an open question. Until the recession, our bankruptcy clients reported that they were able to get a mortgage 1 to 2 years after discharge, assuming that they had the income to support the payments and had been responsible about making payments to any creditors they had post-bankruptcy. We just don’t know now what’s happening or is going to happen in this extraordinary economic cycle.
Q: Will I ever qualify for credit again?
A: Typically, Chapter 7 debtors begin receiving credit card offers within 6 months of their discharge order. Once you receive a discharge order in any chapter of bankruptcy (Chapter 7, Chapter 11 or Chapter 13), you can do anything anyone else can do — own a business, obtain lines of credit, have credit cards, etc. — but you may have to pay higher interest rates or provide some collateral or other security.
Get the facts as they pertain to your situation through a bankruptcy counseling session with a qualified attorney.