How will filing bankruptcy change my life?
My clients ask all the time. They imagine the remainder of their life after bankruptcy with neither credit cards nor credit. Outcasts in our economy. Shunned by all. Crippled by bankruptcy.
They can see a scarlet “B” tattooed on their foreheads to mark them forever as Bankrupts.
My short, irreverent answer to that question is that they will sleep better at night.
Other side effects of bankruptcy include a drop off in telephone calls from collectors and shrinkage of the amount of mail they get.
They get smarter; debt makes you dumb.
All true, but probably not the answer they expected from a bankruptcy lawyer.
You drive change
The more serious answer has to reflect what brought them to me to file bankruptcy in the first place.
When the driving force was gambling or some other irresponsible behavior, I tell them that I can dig them out of this hole with bankruptcy relief, but positive change requires that they change their behavior.
When the current crisis is created by events beyond their control, like job loss, divorce or illness, bankruptcy is likely to put their financial lives back on track.
For those in business, failure is one of the risks that we take when we sign up to be entrepreneurs. Bankruptcy clears the financial decks so we can go forward with life.
Life after bankruptcy
At the superficial level, life continues only slightly changed after bankruptcy.
Your credit score probably goes up a bit, in the short run. Credit is more expensive shortly after bankruptcy, becoming more available and more affordable as time goes on. With time and a down payment, you can buy a house.
Your ability to borrow too much on student loans endures.
Most important, in my view, is that eliminating debt means that you can take responsibility for providing for your old age. A frightening slice of Americans have nothing more than Social Security to support themselves as they age. And age they will, even if they believe they will never “retire”.
An equal number of people couldn’t handle a $400 emergency without borrowing money.
Life after bankruptcy can be what you make it. Bankruptcy makes it possible; you fill in the details.