Life After Bankruptcy:
Your Future is
Brighter than You Think
According to the American Bankruptcy Institute, there were 69,432 business and non‐business bankruptcy filings in California in 2019. When experiencing financial hardship or overwhelmed with debts, filing for bankruptcy may be one of the more promising options to remedy your financial situation and obtain debt relief. Understanding what to expect, as well as the long-term effects of bankruptcy, is crucial to get you better prepared.
If you're thinking about filing for bankruptcy or if you are worried about what life post-bankruptcy looks like, consulting with an experienced California bankruptcy attorney is important for proper guidance. At The Orantes Law Firm, we have the resources and experience to assist and guide individuals and businesses in bankruptcy-related matters. Our attorneys are available to discuss your financial situation and help you understand some of the things to expect after filing for bankruptcy. We proudly serve clients in Los Angeles County, Orange County, Irvine, and throughout Southern California.
Creditor harassment is a situation in which creditors and collection agencies use deceptive, threatening, and unethical techniques to try to recover debts from consumers. Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are restricted from harassing, abusing, threatening, or oppressing the debtor or anyone else they contact. If the FDCPA is violated, the debtor is within their rights to sue the creditor or debt collection agency.
Informing Creditors of Bankruptcy
When you file for bankruptcy, the United States Bankruptcy Court will send a notice of the filing to all of your creditors. This is to inform the creditors that the consumer has filed for bankruptcy, and all collection efforts must cease. Every creditor that you list in your bankruptcy schedule will receive the notification.
Creditor Calls Should Stop
U.S. bankruptcy law states that once a consumer files for any bankruptcy chapter and the creditor receives the filing notice from the U.S. Bankruptcy Court, all debt collection efforts must stop immediately.
Filing for bankruptcy activates an "automatic stay" order. This is a federal court injunction imposed against creditors or debt collectors who want to take any action against a debtor. The automatic stay order prohibits the creditors from contacting consumers who have already filed for bankruptcy.
What to Do If They Don't Stop
The automatic stay order gives the debtor breathing space by stopping all collection efforts, harassment, and foreclosure actions. Once the automatic stay order goes into effect, creditors are not allowed to call the debtor or send texts, emails, or demand letters.
However, if a creditor disobeys the automatic stay order and continues calling, texting, or harassing you, you can take legal action. An experienced bankruptcy lawyer can help protect your rights and bring legal action against disobedient creditors or debt collectors.
Bankruptcy and Your
Filing for bankruptcy can have a significant impact on your credit report in the following ways:
- Payment History: Your payment history is an essential factor used to determine your credit score. Filing for bankruptcy relieves you of your obligation to fully repay your debts. Due to your payment history, potential lenders may reject your application for a loan or line of credit.
- A Decrease in Your Credit Score: When you petition for bankruptcy, your credit score will fall to anywhere between 160 and 220 points, depending on your type of bankruptcy. A good credit rating may plunge into the fair-to-poor range.
- Future Loan Chances: Unfortunately, filing for bankruptcy makes qualifying for future loans quite challenging. As a result of your poor, fair, or bad credit score, your chances of getting auto loans, home loans, or credit cards will be extremely low.
How Long Does Bankruptcy Stay On Record?
A Chapter 13 bankruptcy will remain on your credit report for seven years, while a Chapter 7 bankruptcy stays on your credit report for 10 years. Future lenders can see your bankruptcy filing in the public records section of your credit report.
Fixing Your Credit
As mentioned earlier, filing for bankruptcy reduces your credit score. Nonetheless, you can start rebuilding your credit immediately. Here are some steps you can take to fix your credit score:
- Monitor your credit scores frequently
- Check your annual credit reports thoroughly
- Consider applying for bankruptcy-friendly unsecured credit cards
- Ensure that your balances are zeroed out
- Take out a credit-builder loan
- Apply for a secured credit card
- Keep your eyes open for credit card offers
- Handle reaffirmed debts carefully
- Become an authorized user
- Avoid previous financial mistakes you made
Once your debts are discharged, you can start rebuilding your credit. Making smart financial decisions will help improve your credit score steadily as you work toward regaining financial stability.
Work with an Experienced Bankruptcy Attorney
Filing for bankruptcy in California is a complicated process. Even with that, life post-bankruptcy often comes with a lot of unexpected changes. When considering filing for bankruptcy, it is important that you speak with an experienced bankruptcy attorney for proper guidance and to get insight on what to expect.
At The Orantes Law Firm, we are committed to offering experienced legal services and guiding clients through life post-bankruptcy. As your legal counsel, we can evaluate your financial condition, explore your available options, and determine the right type of bankruptcy for you. We will also advise you on how to rebuild your credit, help you make informed financial decisions, and avoid potential pitfalls. Our team will help craft a unique solution to build a stronger financial future.
Contact us at The Orantes Law Firm today to schedule a free consultation with a knowledgeable bankruptcy lawyer. We can offer you the comprehensive legal counsel, assistance, and support you need to make important decisions in your bankruptcy proceedings and life after bankruptcy. We serve clients in Los Angeles County, Orange County, Los Angeles, Irvine, and throughout Southern California.