Bankruptcy is intimidating for most participants, primarily due to the negative stigma surrounding bankruptcy claims. However, the financial option tends to be a fresh start for most filers and offers a new opportunity to reshape your future.
It sounds like an excellent path for some folks, but what can participants expect after filing for bankruptcy? Will credit scores and debt collections look completely different afterward? How will it affect my reputation for friends and family?
Three positive expectations
There are significant benefits that filers can reap after bankruptcy. For example, most filers see a substantial portion of their debt either eliminated or reduced due to discharge. Also, they may receive monthly payment plans that will keep them on track after the bankruptcy process. Three other advantages to bankruptcy include:
- Maintaining most of your critical assets, including homes and cars
- Developing smart habits to a finance-savvy lifestyle
- Reducing harassment from debt collectors or creditors
Ultimately, it’s an option that works for people who need to reset their financial situation. It’s not a decision to make lightly, but those who do tend to feel a significant amount of relief from the process.
The most difficult challenges after bankruptcy are rebuilding a credit score and your reputation among your peers. First, it’s important to note that credit scores do take a hit after a bankruptcy claim. Most filers can rebuild their credit over time and raise it to a higher score than before the bankruptcy, but it takes time and effort to do so.
Secondly, if you are concerned about your public perception, remember that you took this option in your best interest. If someone makes you feel bad for taking accountability for your finances, it’s not worth considering their opinion in the first place.
People should expect a happier future after bankruptcy, especially if they are willing to put in the work and time to live a more fiscally-responsible life.