The Law Office of Andrew Magdy
Saint Louis Bankruptcy

After Bankruptcy

Life Goes On

Do Not Be Scared Of Life After Bankruptcy: Enjoy Being Debt Free, Responsibly!

You filed for bankruptcy, went through the entire grueling process, received your discharge, and now the case is closed. You are excited to start your new life! But what now? Now it's time to start rebuilding your credit. 

There's no denying that this will be hard, but it won't be impossible. You should receive offers from creditors through the mail as soon as you complete your case, soliciting your for loans. Please be wary of these and select offers with low interest rates (if you even decide you need a credit card - you might want to go to your bank and inquire about a 'secured' credit card first) as you will need credit to improve your credit rating. Remember what you learnt through taking the financial management courses too; stick to a budget, and keep records of where your money is going. Avoid the cycle of high-interest loans that can only be substantiated by taking out more high-interest loans!

With your old debt wiped cleaned under the bankruptcy, you may have more liquid cash available to you since (if you went through a Chapter 7) you will immediately and dramatically see a reduction in your debt-to-income ratio. In the eyes of some lenders, you may then appear to be a better risk for them, since you now have your finances under control and are ineligible to file for another Chapter 7 for 8 (eight) years.

If you filed a Chapter 13 you should also see a reduction in your debt-to-income ratio, but it will not be as nearly as quick as those Chapter 7 petitioners. You will however have much more experience of living on a budget, which you can use to your benefit in your new financially responsible life.

Whatever Chapter you filed, we would always advise you not to borrow too much too quickly, but rather ask that you live within your means and make timely monthly payments to re-establish your credit. This way, through careful planning, you will be able to get loans on more favorable terms that will see you benefit in the long term. Do not use credit as a necessity, but rather as a privileged convenience. Try to evaluate why you are spending x on y - do you really need it, or do you just want it? What will be the consequences down the road of this purchase?

If you have any questions, please first think over what you learned during the financial management courses, then if you are really stuck, please call me.