The first physical manifestation of filing bankruptcy is that you will be inundated with junk mail from car dealers all over the state, and credit cards all over the country offering you new credit.
To most clients, this makes no sense. “I just filed bankruptcy! How can they offer me credit? Don’t I have to wait 10 years before I can borrow again?”
The truth is that the credit industry moves laser fast in trying to sign people up for more debt right away. We live in a credit-oriented society (notice how many ads there are during a typical Broncos game offering car loans, credit cards, phone plans, etc., all encouraging you to borrow more money), and the banks have figured out that the post-bankruptcy market is an excellent one to exploit to get more customers and make more money.
Think about it.
These banks are rich. And they make money writing more and more debt. And they also know that they will have to write off a certain amount of that debt in bankruptcy when their good, honest customers have hard times and file bankruptcy.
But, these folks who file also no longer have debt so they are now better credit risks for the banks and THEY WANT YOUR BUSINESS!
The main factor they look at is whether you have a good job or a regular income source like social security.
While some lenders will not want to do business with you right away, there are plenty that will. The easiest loans to get are secured debts such as car loans or secured credit cards. The bankruptcy will be on your credit report for up to ten years, but it becomes less relevant to consideration of new credit if new post-bankruptcy loans are taken out and payments are made perfectly on time. This adds to your credit report in a positive way, and I have had clients rebuild their credit in a remarkably short time after filing.
In general, even mortgage lenders will consider applications for house loans two years after bankruptcy if the person can qualify for the loan and have rebuilt their credit during the two-year period.
So, all is not lost in the credit world by filing bankruptcy. Most of the steps to rebuild are common sense and I would be glad to explain them further if you want to call me, Peter Milwid, at 303-831-0733.
Thank you! And enjoy your fresh start!
