Once your bankruptcy case is over, you are legally free of your included debt obligations. However, your ability to get credit will be somewhat harmed for 7 to 10 years by the fact that you had to file bankruptcy. The good news is that you now do not owe any credit card debt, utility expenses, medical bills or loans, and may even have been forgiven for old tax bills. When your bankruptcy is officially discharged, you will be able to focus your energy on saving money and paying off any debts that were not excused (such as student loans, child support, recent taxes, court costs, or alimony), rather than being subject to financial examination by the federal bankruptcy court and its representatives.
Once you are officially out of bankruptcy, which is usually about 6 months after you initially filed Chapter 7 or right after you finish your Chapter 13 repayment plan, you can resume getting credit. However, you should be careful what new obligations you take on. Once your bankruptcy case is discharged, you have no legal protection against new debt. You can be sued, have wages garnisheed and lose property such as a house or a car for debts you take on and do not pay. You can only file for Chapter 7 debt forgiveness once every 8 years, while you can file for Chapter 13 debt repayment every 4 years.
If you are trying to buy a car or house or get a personal loan, you will likely need to explain why you filed bankruptcy. Lenders will be concerned that you did not learn anything from your past experience and may default again. The good news is they are also aware that those with a recently discharged bankruptcy are not going to readily be able to file again, and they will have much more legal recourse with a nonpaying debtor with a recent bankruptcy than one who has not filed. Common acceptable reasons for a bankruptcy to lenders are medical emergency or sudden job or business loss. Proving your income will also be of special importance after a bankruptcy discharge. Keep in mind that getting credit cards and personal loans right after bankruptcy without paying high interest rates may be difficult, and you may need to wait several years before being eligible for the best products. Some lenders, especially large banks, will not deal with customers who filed bankruptcy until 7 to 10 years have passed and the bankruptcy is no longer on a credit report.
Checking Your Credit
Checking your credit regularly with Equifax, Experian and TransUnion is a good idea. You will want to make sure all your debts included in bankruptcy are marked as closed, included in bankruptcy, rather than open collection accounts. If you have incorrect information on a credit report, write a letter or make a phone call to the appropriate company to dispute the data.
Occasionally those with a discharged bankruptcy may still get a phone call or letter from a creditor trying to collect a debt. Any debt included in a bankruptcy case is legally uncollectable. If you receive such calls or letters, contact the creditor in writing, explaining that your debt was included in bankruptcy. If a creditor keeps contacting you, contact your local bankruptcy court for help.
Stephanie Mojica has been a journalist since 1997 and currently works as a full-time reporter at the daily newspaper "The Advocate-Messenger" in Kentucky. Her articles have also appeared in newspapers such as "The Philadelphia Inquirer" and "The Virginian-Pilot," as well as several online publications. She holds a bachelor's degree from Athabasca University.