The Aftermath of Bankruptcy

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Bankruptcy is a new chance at life. In many ways it is a complete and total financial death, but it is also the opportunity for financial rebirth! No matter what the circumstances that led to the bankruptcy were, it becomes very, very important to manage things correctly from that point on.

I was one of those people who waited far too long to declare bankruptcy. I struggled with my debt for two years before I even considered that bankruptcy could be the right option for me. Because of that I have nearly two years of late, and non-payment marks on my credit report in addition to my bankruptcy. I allowed my debt to be sold from bank to bank during that time. Each time someone new bought my debt, it created another open account and black mark on my credit report.

Once my bankruptcy was discharged I knew that I wanted to take full advantage of it, and create a truly “fresh start” for myself and my family. Except it wasn’t really a fresh start. I no longer owe the money but my entire history is still there, in black and white on my credit report. And it will be for the next seven years.

Poor me right? Not really. I’m strong enough to deal with it, and fix what I broke. I’m also strong enough to deal with the consequences. If you’re considering bankruptcy as an option, make sure you’re strong enough too. Now matter how desperate the situation is right now, it will be even more desperate if you handle your life the same way after bankruptcy as you did before.

I think that’s what people who haven’t declared bankruptcy don’t understand. Yes, I got away with not paying what I owed several collection agencies at that point in my life. But I sacrificed the next ten years of my life as far as my credit is concerned. I stopped the collection calls, and the sleepless nights, but I bought myself a load stress-of-a-different type.

There is a price to be paid when you declare bankruptcy – it’s both emotional and financial. It is emotional in the sense that I feel guilty – I did something wrong, I didn’t pay my bills. I couldn’t pay my bills because I couldn’t even put food on the table. The fact that bankruptcy was the right option for my family at the time does not make it any less painful to know that it was something I should have been able to avoid.

The financial price of bankruptcy comes with the high interest rates that I will pay (if I can get a loan at all) for the next ten years. The price also comes when legitimate lenders refuse to deal with me because I have a previous bankruptcy – no matter how well I’ve handled my finances and my credit since that time.

Bankruptcy is not a free ride, at least that was not my experience. It was a desperately needed life preserver offered when I was drowning. But it is still going to be a long, long swim back to shore!

I think for most of us (those who have declared bankruptcy) the bankruptcy itself is just the tip of the iceberg. Underneath the waters is a long list of troubles, pain and misery – all of which we caused ourselves. Every bankruptcy has a sob story, a list of hard knocks. But what do we take away from that?

Well, speaking for myself I can tell you without a doubt that I took away quite a few lessons from my own bankruptcy:

  • I had to accept that I was the problem – Even though a large amount of my bankruptcy debt was medical, it does not mean that I get to sit back and blame the health care system in this country. I chose to go without insurance. And so I had to understand that there were consequences for that.
  • I had to learn to manage my own money – After bankruptcy lenders aren’t exactly falling all over you to offer you credit. So the money that I had was all that I had, and that was such a wonderful lesson for me.
  • I had to learn to pay my bills on time – Since I didn’t want another series of charge offs, late payments, and black marks on my credit report, I made paying those new bills a priority. Most people out there already get this concept. I’ll openly admit I was stupid abut my finances! It just wasn’t something I ever thought about. There was no money, so I couldn’t pay the bills. After the bankruptcy, I had to pay the bills – which meant that I had to take on a second job to raise my income.
  • I learned that my credit report is a lot like owning a very nice car – I had the equivalent of a brand new BMW and I chose to drive it off a bridge with my bankruptcy. Now, it is up to me to salvage what is left. No one is going to hand me another Beemer, it’s up to me to fix the one I destroyed. It requires making repairs, active maintenance and regular tune-ups. I learned that my credit report isn’t something that Is just “out there”. It’s my report, and I am responsible for what is included there.

So, in a lot of respects, my bankruptcy is the best that ever happened to me financially. Not because I no longer owe all of my medical debt, but because It forced me to put every single area of my financial life in order. I am a better person because of it today. It’s definitely the most major learning experience I’ve ever had.

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6 Responses to “The Aftermath of Bankruptcy”

  1. Randi Says:

    have a question about reaffirmed loans and credit reporting. I have been monitoring my credit report since our bankruptcy discharged earlier this month. I have disputed several things and have seen our FICO score improve as a result. We are now in the mid to upper 600’s vs upper 500’s before challenging.

    One thing that has me confused now is that we have two car loans that we reaffirmed. One car loan continues to show as paid and current and does not state that it was included in the bankruptcy. We did not receive any confirmation from them that they accepted the reaffirmation either. The other now shows no payment history and that it was included in the bankrupcty even though they returned the reaffirmation paperwork through the court and we continue to make timely payments. I disputed this loan on the credit report based on the ground that it was reaffirmed. The bank which holds the loan reported back that the way it is reported is correct – included in the bankruptcy with no mention of the reaffirmation. Will this eventually show payments being made or that it was reaffirmed? The weird thing is that one credit reporting agency dropped the account from both my husband’s and my credit reports based on the challenge while the second has kept it on there without noting the reaffirmation.

    As for the house, we were told by our lawyer that in NJ, you don’t reaffirm mortgages. We continue to pay our mortgage payment and on time. This account shows as included in the bankruptcy too. Will it someday show current payments?

    I was hoping that coming out of the bankruptcy with these 3 accounts intact with current and timely payments history that we would already have some positive credit in place. Now I am wondering whether this is right. I had not questioned any of this while we were in the process but today received a letter in the mail from the Bankruptcy Resource Center http://www.restorecredit123.com and http://www.bankruptcysurvivor.com (unsolicited of course) that put all these questions into my head.

    Thanks so much for your help!

  2. Ann Crall Says:

    I am inquring about a letter I received from Bankruptcy Resource Group in regards to getting pre-approved for a auto loan. Can not find the application on your web site. Could you please forward one to me. Tank you, Ann

  3. alex hammer Says:

    It is sad that the lady who declared bankruptcy is unwilling to blame this country’s health care system , which may have largely contributed to her debts.Why not? She should blame the US. This is a Third World country when it comes to protecting its citizens from high medical bills. This is unheard of in Europe.

  4. ar Says:

    Looking for information about getting help financing a vehicle. I have been out of the B word for almost a year and I am working hard reestablishing my credit. I will never cosign with anyone again that is what messed me up and the individual fail to pay their insurance premium and totaled another individual car……. Now I have to spend the next 15 yrs of my life paying for it well actually 10 now…. the first five are already behind me.

  5. Gwen Sample Says:

    I struggled with debt too, wanting to pay all my creditors. I lost a job of 22 years and found one paying 13,000 per year less. After being in chapter 13 for over 5 years, I completed my plan. This does not matter to creditors. They see the bankruptcy and close the door in your face. If they offer you credit it is at an extremely high rate. Will you ever survive this?

  6. Nenita Francisco Says:

    On chapter 7, how long will this affect or be on my credit

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