The Effects of Bankruptcy

Will Everything Remain the Same after Bankruptcy?

Hi!

My husband and I are about to file for bankruptcy. I have been reading and searching the net to find out more about it.

We have consulted an Attorney, who suggested that this would be our way out for a fresh start and that we need to doing before 10/17. I'm worried how life will be after that.

Everyone says that we can start credit soon after Chapter 7, but at what price?

How expensive will it be to purchase a car, or refi our home? We just bought a home at a decent rate (6.0%). The only thing is that my husband's work truck is old and may need a new one within the next year or 2.

I am very confident that we have learned our lesson, and will not end up in this problem again.

So my question is, is it true that we can move forward at a decent rate (under 15%) after this.

Rosaisela

You will likely be able to get credit fairly quickly after your bankruptcy discharge, maybe even under 15% - although that is unlikely. Secured loans, like a car loan, can probably carry a rate in excess of 25%.

Unsecured loans, like credit cards, will be even more expensive, mainly due to the fees the bank will charge.

However, due to the great amount of competition in financial circles and maybe even the recklessness of lenders, you might not have to pay all that much extra.

[Note that the collapse of the sup-prime mortgage market has caused quite a shift in lending practices. The bottom line is that bankrupts will have a much harder time getting a mortgage and, perhaps, other credit.]

Also bankruptcy can affect you ability to get a job or rent an apartment, might affect your insurance rates and utility company deposits.

For more information, please read Life After Bankruptcy and Bankruptcy Fallout.

Your lawyer is right. File before October 17th. Things will get harder after that.

Good luck.

Read this comprehensive article about the changes caused by Bankruptcy Reform.