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Life After Bankruptcy

Rushing Law Firm, PLLC Feb. 7, 2024

At Rushing Law Firm, PLLC, we understand that filing for bankruptcy can be a daunting process. We're here to tell you that there's a light at the end of the tunnel.  

The moment the court grants your discharge order, wiping out your qualifying debts, marks the beginning of your new life. It's like hitting the reset button on your financial journey. From this point on, your creditors are no longer allowed to sue you, garnish your wages, or contact you in any way regarding the discharged debt. 

What if Creditors Keep Calling? 

However, there may be instances where a creditor might unintentionally attempt to collect a forgiven debt. If that happens, don't panic. Keep your bankruptcy paperwork close and provide them with the necessary details such as your case number, filing date, and discharge date. Usually, they'll stop bothering you once they have this information. But if they don't, let us know and we'll step in to handle it. 

The Impact on Your Credit Score 

Let's be honest. Filing for bankruptcy does affect your credit score. This mark will stay on your credit report for up to ten years. But don't lose heart, because its impact lessens over time. Rebuilding your credit post-bankruptcy will be a marathon, not a sprint. It takes time, patience, and consistent effort.  

Once you've received your discharge, you'll start getting credit card offers again. In a year or two, you should be able to purchase a car on better credit terms. Your chances of renting a place from a professionally-managed company will improve after approximately two years.  

Within about four years, most people qualify for a mortgage, perhaps even sooner if your bankruptcy was due to circumstances beyond your control. 

Rebuilding Credit After Bankruptcy 

Here at Rushing Law Firm, PLLC, we've assisted countless clients through the bankruptcy process and beyond. We know that after the dust settles, one of the first questions you'll likely ask is, "How can we rebuild our credit?" So, let's discuss some practical steps you can take to start that journey. 

Build a Budget 

First and foremost, take control of your finances. Building a budget can help you stay on top of your expenses and avoid falling into debt again. If you've never created a budget before, consult someone who you look up to financially. Also, there are plenty of online tools and resources available to help you get started. The general rule of budgeting: set realistic financial goals and stick to them. One of your first goals can be raising your credit score in xx amount of years, once bankruptcy falls off your credit report.  

Review Your Credit Reports 

It's essential to understand where you stand after bankruptcy. Obtain your credit reports from all three major credit bureaus. Check them thoroughly, look out for any errors, and if you spot any, dispute them immediately. It's crucial to ensure your credit report accurately reflects your financial history. 

Pay Your Bills on Time 

This might seem like a no-brainer, but it's worth mentioning. Consistently paying your bills on time is a powerful way to demonstrate financial responsibility. It shows potential lenders that you're serious about maintaining good credit habits. 

Start an Emergency Fund 

Unexpected expenses can derail the best-laid plans. Having an emergency fund can help you navigate these unforeseen costs without resorting to credit or loans. Even if you start small, every bit helps. 

Be Cautious With New Credit 

While it's true that you may start receiving credit card offers soon after bankruptcy, it's vital to proceed with caution. Consider credit card alternatives, like secured credit cards or becoming an authorized user on someone else's account. These options can help you rebuild your credit without taking on too much debt. 

Save for Retirement 

You might be thinking, "What does retirement have to do with rebuilding credit?" Well, saving for retirement isn't just about preparing for your golden years. It's also about practicing financial discipline and showing potential lenders that you're serious about your long-term financial health. Plus, contributing to a retirement account can also provide tax benefits. 

Participate in Financial Courses or Counseling 

In many cases, individuals who file for bankruptcy are required to complete credit counseling and debtor education courses. These are designed to help you understand the causes of your financial situation and equip you with the tools to manage your finances effectively moving forward. In Arkansas, as in many other states, these courses can often be completed online or over the phone, providing a flexible option that can fit around your schedule.  

It's also worth noting that while these courses are an important part of the bankruptcy process, they are just one piece of the puzzle. To truly rebuild your financial life after bankruptcy, it's crucial to take a proactive, comprehensive approach to managing your finances. This approach will likely include multiple — not just one — of the strategies we listed here.  

Build a Brighter Tomorrow, Starting Today 

Bankruptcy isn't the end of your financial journey; it's a new beginning. It's crucial to handle your credit responsibly post-bankruptcy. Taking proactive steps such as creating a budget, saving for emergencies, and putting money aside for retirement can significantly contribute to rebuilding your financial future. 

At Rushing Law Firm, PLLC, we're committed to helping you regain control over your financial life and build a brighter future. 

Life after bankruptcy might seem a little heavy at first, but with us by your side, you'll soon realize it's just the start of a new chapter. A chapter where you're in control and where your financial freedom is within reach. Reach out today to schedule a meeting with a bankruptcy attorney in El Dorado, Arkansas. We proudly serve clients throughout Magnolia, Camden, Crossett, Union County, Columbia County, Ashley County, and Ouachita County.