Once you've made the big decision to file for bankruptcy, it's important to understand how it will affect various parts of your life. Certainly, the longer period of bankruptcy effects will happen after the case is closed. What are some of the effects you can expect after receiving the protection of bankruptcy? Here are a few of the most common and noticeable.
1. A Hit to Credit. It's no secret that bankruptcy will negatively affect your credit for some time. This is the price you pay for the necessary — and generally more important — debt relief. Anyone going into a bankruptcy claim should consider their financial and personal goals to ensure they don't need to draw on credit very often for a few years after the case is finalized. Then, learn how to take proactive steps to rebuild faster.
2. Fewer Liquid Assets. Do you plan to file Chapter 7, or liquidation, bankruptcy? This is a common choice due to its speed and simplicity. However, you won't be able to exempt many liquid assets. So when you exit bankruptcy, expect to have a lower amount of cash and liquid accounts to draw on. Craft a plan to start building back your available cash for emergencies and unexpected expenses.
3. Public Records. Because it's a court matter, bankruptcy is also a matter of public record. Few people and organizations will actually take the time and effort to locate your particular bankruptcy case record, so you shouldn't worry that everyone will know about it. However, it may be something you will have to address with future employers, lenders, or partners.
4. Lender Collection Efforts. Unfortunately, lenders who didn't get full repayment during the bankruptcy case may still pursue you to get paid. Discharged debts are no longer your responsibility and you are protected from harassment. But harassment may still occur, and you'll need to have a plan to thwart it. Your attorney may need to get involved on occasion.
5. Financial Freedom. The goal of bankruptcy is to improve your life by freeing you from unmanageable debts. Once you are freed from these, you have more choices as to how to spend your money. Decide now how to use this to make the best choices possible. Learn to budget better, boost retirement savings, build up cash, and develop good financial habits.
Where to Start
Want to know more about how the closure of a bankruptcy case will affect your future? Start by meeting with a bankruptcy lawyer.
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