Bankruptcy can be a lengthy process. Depending on the kind of bankruptcy you file, you may have to wait several years between when you first file your paperwork and when the courts actually finalize your bankruptcy and discharge your debts.
The discharge of your unsecured debts is perhaps the most important part of bankruptcy. It will absolve you of the legal obligation to repay the debts included in the bankruptcy and prevents the businesses from continuing collection efforts related to those debts.
Once you are completely finished with the court process and your discharge, what will happen in your life?
Your budget will be easier to manage
Once you eliminate your unconquerable credit card balances or your medical debt from your recent cancer treatment, your budget will improve. You will be able to spend the money that once went toward minimum payments on those obligations on your mortgage or household expenses instead. You might even be able to put some money aside in savings.
Opportunities for credit will arise shortly after your discharge
You may start getting credit card offers in the mail within a few weeks of your bankruptcy discharge. You can expect a requirement for a security deposit in many cases, as well as high interest rates.
However, getting a new card and paying off your balance every single month is a simple way to start rebuilding a positive credit history after bankruptcy.
Big financing options are available within a few years
Needing to buy a car or a vehicle after bankruptcy can be a bit of a challenge, as there are often limitations on what lenders will work with you. To qualify for standard financing opportunities again, you will typically need to wait at least two years after your discharge. The longer you can wait before applying, the less of an impact your bankruptcy will have on your ability to qualify and the terms your lender offers.
Eventually, the bankruptcy leaves your credit report
Years after your bankruptcy discharge, it will come off of your credit report. A Chapter 7 bankruptcy will come off of your report ten years later, while a Chapter 13 discharge leaves your credit report seven years after your discharge. At that point, your bankruptcy will no longer limit your credit opportunities or lower your credit score.
Knowing how your financial circumstances will change after a personal bankruptcy might inspire you to file.