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How Will Filing Bankruptcy Affect You?

Updated on February 27, 2013

There are two different schools of thoughts when it comes to filing personal bankruptcy.  One group considers bankruptcy as a new beginning, an opportunity to begin anew with a fresh slate.  Others feel that bankruptcy should be avoided at all costs.  Filing bankruptcy, however, is a legal option that is certainly worth considering if you are struggling to manage your debt.  It is important, however, that you are aware of the consequence filing bankruptcy can have and are prepared to deal with them.  What are some of those consequences?

Restricted Opportunities to Get Credit

One of the most serious consequences of filing bankruptcy is the severe limitations it sets on your ability to get credit when you need it.  Your credit rating could fall as much as 100 points and the bankruptcy will stay on your credit history for 7-10 years.  Many lenders will not consider extending credit to you as long as the bankruptcy is still on file.

This is not an insurmountable problem.  After filing for bankruptcy, you will eventually be able to get credit from some lenders.  It is important that you make every effort to pay your remaining bills, such as the mortgage and utilities, in a timely manner.  Before too long you will be able to obtain a secured credit card.  If you make those payments on time as well, your credit score will begin to rise and you will begin to reestablish a firm credit footing.  Two years after the bankruptcy has been discharged, you may be able to get a mortgage as well.

Bankruptcy Triggers Emotional Consequences

Some people who file for bankruptcy go through a period of depression.  They suffer from low self-esteem and feel like a failure.  If you find yourself experiencing these emotions when you are in the bankruptcy process, feel free to indulge them…for a moment.  It’s okay to go through a brief mourning stage, but it is important that you do not allow yourself to sink into a major depression.

Instead of dwelling on the negative aspects of bankruptcy, use this period in your life to learn better money management techniques.  Take positive steps to help you make the most of this new financial opportunity.  Learn how to make and stick to a budget.  Study ways to begin saving money for future emergencies.  Each accomplishment will make you feel better about yourself.

Keeping your self in good physical condition will also help your spirits.  Find activities that keep you occupied.  Take long walks, take up a new hobby and eat a healthy diet. 

Remember, you are not alone.  There are many famous Americans who chose to file bankruptcy at one point in their lives and then went on to become highly successful people.  Abraham Lincoln, the  16th President of the United States actually filed bankruptcy twice in his life.

If you feel the consequences of bankruptcy are less severe than continuing to struggle to stay afloat in a sea of debt, bankruptcy may be the wisest thing for you to do.  Consult an experienced bankruptcy attorney for advice. 


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