People contact me from time to time and say that they’ve explored the matter and think bankruptcy would be in their best interest, but they are concerned with how filing for bankruptcy will affect their ability to get new loans in the years to come. For this reason, you need to speak with a Bankruptcy Lawyer to know all of your options. My usual response is to that great, and very important, question is that it can take you as few as 2-3 years if you do it the right way.
Is There Life After bankruptcy
Let’s start with a reality check. The reality check is that most people who are thinking about bankruptcy are: (1) already behind on payments and have a credit rating that is starting to reflect that fact and (2) they have a debt-to-income ratio that is less than ideal. When a lender checks a credit rating or a debt-to-income ratio, they don’t ask why a person has gotten into debt, they only ask, “What’s the risk for me in lending to this person?” If a person seems risky, they are reluctant to lend. So, chances are, you may not be able to get a loan until you take some kind of action that will shift the tide. When deciding whether bankruptcy is a good idea even if it does affect my credit score, the key question to ask is this: Will it take me more than three years for me to pay back all my loans? If the answer is yes, bankruptcy might be the fastest way to get your credit rating, and your financial life, back on track.
So how exactly will a bankruptcy affect my credit? Legally, a creditor can keep the fact that they weren’t paid on your credit for up to 10 years. Bad news, I know. But there is good news. The good news is that this fact in no way means that your credit will remain low for 10 years. If you manage your debts and bills wisely, you can rebound quicker than you would have believed possible. How can this be? Well, let me tell you.
Once out of bankruptcy you should wait a few months and then apply for a secured credit card. You ask, “What is a secured credit card?” A secured credit card works almost like a debit card where you’ll need to load the credit card in order to use it. Under a secured credit arrangement, the debtor places funds on deposit with the bank or other financial institution. The lender then allows the debtor to make credit card purchases from 90% to 150% of the amount placed on deposit – depending upon the individual circumstances. For example, if you put $500 in the account; you can charge up to $500. You may be able to add to the deposit to add more credit, or sometimes a bank will reward you for good payment and add to your credit line without requesting additional deposits. This arrangement enables people with poor credit records to have the convenience of having a credit card and a way to rebuild their credit score, while assuring the lender that there is a source of money from which the obligation will be paid. The last thing to remember when you obtain a secured credit card is that you need to make sure that the lender reports the fact that you’re making diligent payments to all three credit bureaus. If you do this one thing, in 3-5 years you’ll see an amazing jump in your credit score.
Ok. Now that we’ve discussed the first major thing you can do, you ask “what else can I do?” Consider the following:
- Consider opening a checking and savings account. Some lenders look at this to determine if you can responsibly handle money. Being able to pay bills from a checking account is also much more convenient than paying with money orders.
- Consider applying for store and gas credit cards for purchases for which you would normally pay cash. These cards usually have small limits and can help you restore you credit, but only if you have the discipline to set aside the money to pay the bill each month.
- Pay your utility bills and rent on time for at least a year.
- If possible, find a friend or relative to cosign for you on a loan and pay it on time.
- Look for car dealers and mortgage brokers that attest to being “bankruptcy friendly.” Buy a used car on credit so you do not get hit with the depreciation that occurs during the first two years of a new car purchase.
- Stay away from payday loans that are at high interest rates and are a bad credit trap.
- Write a letter to each credit reporting agency explaining the circumstances that lead to your bankruptcy filing.
- Live within your means. Do not unnecessarily increase your debt-to-income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.
- Pay your reaffirmed, pre-bankruptcy debts on time.
So, is there life after bankruptcy? The answer is yes. Does regaining your life take a little work? Again, the answer is yes. But, can you do it? Of course you can!
Free Consultation with a Bankruptcy Lawyer
If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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Salt Lake City
Salt Lake City, Utah
|City of Salt Lake City|
“The Crossroads of the West”
|Coordinates: 40°45′39″N 111°53′28″WCoordinates: 40°45′39″N 111°53′28″W|
|Named for||Great Salt Lake|
|• Type||Strong Mayor–council|
|• Mayor||Erin Mendenhall (D)|
|• City||110.81 sq mi (286.99 km2)|
|• Land||110.34 sq mi (285.77 km2)|
|• Water||0.47 sq mi (1.22 km2)|
||4,327 ft (1,288 m)|
|• Rank||122nd in the United States
1st in Utah
|• Density||1,797.52/sq mi (701.84/km2)|
| • Urban
||1,021,243 (US: 42nd)|
| • Metro
||1,257,936 (US: 47th)|
| • CSA
||2,606,548 (US: 22nd)|
|Time zone||UTC−7 (Mountain)|
|• Summer (DST)||UTC−6|
|Area codes||801, 385|
|GNIS feature ID||1454997|
|Major airport||Salt Lake City International Airport|
|Website||Salt Lake City Government|
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the capital and most populous city of Utah, as well as the seat of Salt Lake County, the most populous county in Utah. With a population of 199,723 in 2020, the city is the core of the Salt Lake City metropolitan area, which had a population of 1,257,936 at the 2020 census. Salt Lake City is further situated within a larger metropolis known as the Salt Lake City–Ogden–Provo Combined Statistical Area, a corridor of contiguous urban and suburban development stretched along a 120-mile (190 km) segment of the Wasatch Front, comprising a population of 2,606,548 (as of 2018 estimates), making it the 22nd largest in the nation. It is also the central core of the larger of only two major urban areas located within the Great Basin (the other being Reno, Nevada).
Salt Lake City was founded July 24, 1847, by early pioneer settlers, led by Brigham Young, who were seeking to escape persecution they had experienced while living farther east. The Mormon pioneers, as they would come to be known, entered a semi-arid valley and immediately began planning and building an extensive irrigation network which could feed the population and foster future growth. Salt Lake City’s street grid system is based on a standard compass grid plan, with the southeast corner of Temple Square (the area containing the Salt Lake Temple in downtown Salt Lake City) serving as the origin of the Salt Lake meridian. Owing to its proximity to the Great Salt Lake, the city was originally named Great Salt Lake City. In 1868, the word “Great” was dropped from the city’s name.
Immigration of international members of The Church of Jesus Christ of Latter-day Saints, mining booms, and the construction of the first transcontinental railroad initially brought economic growth, and the city was nicknamed “The Crossroads of the West”. It was traversed by the Lincoln Highway, the first transcontinental highway, in 1913. Two major cross-country freeways, I-15 and I-80, now intersect in the city. The city also has a belt route, I-215.
Salt Lake City has developed a strong tourist industry based primarily on skiing and outdoor recreation. It hosted the 2002 Winter Olympics. It is known for its politically progressive and diverse culture, which stands at contrast with the rest of the state’s conservative leanings. It is home to a significant LGBT community and hosts the annual Utah Pride Festival. It is the industrial banking center of the United States. Salt Lake City and the surrounding area are also the location of several institutions of higher education including the state’s flagship research school, the University of Utah. Sustained drought in Utah has more recently strained Salt Lake City’s water security and caused the Great Salt Lake level drop to record low levels, and impacting the state’s economy, of which the Wasatch Front area anchored by Salt Lake City constitutes 80%.
What happens to health insurance after filing for Chapter 11 bankruptcy?https://t.co/IpioaL85zG pic.twitter.com/OYEdAAKolo
— Tim Cella (@TimCella2) October 20, 2022