What Is Life Like After Bankruptcy?

What Is Life Like After Bankruptcy?

What Is Life Like After Bankruptcy?

Life after bankruptcy includes a new financial beginning and some challenges. Bankruptcy stays on a credit report for 10 years, which limits credit options, according to Bankrate. Lenders sometimes view individuals who filed bankruptcy as too risky because some past debts were written off. As a result, individuals who filed bankruptcy may not be issued a credit card for some time.

When a credit card is issued to someone who filed bankruptcy, interest rates and fees are often high, notes Bankrate. Some people who filed Chapter 7 bankruptcy, in which all debts are discharged, sign up for a secured credit card to rebuild credit.

For people who file a Chapter 13 bankruptcy, money may be tight because payments on past debt are required, according to Bankrate. An individual who filed Chapter 13 makes payments for three to five years, with enough money allocated by the court to live on and the rest divided among creditors on a monthly basis. Anyone paying off a Chapter 13 bankruptcy may not acquire new debt without permission from the court.

Bankruptcy can also cause insurance rates to increase, explains Bankrate. A prospective or current employer may find out about a bankruptcy filing since it is public information. An individual who files for bankruptcy can add a 100-word notation to credit reports to explain reasons for the filing.