Determining that you need to file for bankruptcy isn’t something that most people do easily. When you realize that you have overwhelming debts, you might find that you need to do something. It is all too easy to think about the bankruptcy process itself when you are deciding what to do; however, you also need to consider the aftermath of the filing.
There are several ways that filing can impact you even up to a decade after your case gets started. Since these can have an impact on how you are able to live your life, you should make sure that you take the time to consider the totality of ramifications. Here are some aspects of your life that may change:
Entry on your credit history
When you file for bankruptcy, that information is placed on your credit history. Almost all credit providers will consider this a high risk entry since you were legally relieved of the debts that you owed. This can remain in place for 10 years, but as time moves forward, the impact will be reduced.
Learning to live on a budget
If you file a Chapter 7 bankruptcy, you aren’t likely going to have to live on a strict budget because you aren’t making payments to the bankruptcy court. If you file Chapter 13, you will be on a set budget because you will have to make regular payments to the court based on your income and allowed expenses.
As part of the process, you will have to go through education courses that will help you learn how to live on your income. Creating a budget and learning how to use credit wisely are two important skills to apply as you venture beyond the bankruptcy. Working on building an emergency fund and savings account is beneficial while you are rebuilding your life.
Eventually, you might need to obtain credit. While your bankruptcy case is still open, you can’t obtain new credit lines unless you have the approval of the court. Once the case is closed, you might find that you don’t have attractive credit offers. The credit you are eligible for will likely come with high interest rates and fees. You need to use this type of credit wisely so that you can move forward with building your credit history and can get better terms in the future.