So you filed Chapter 13 bankruptcy, what comes next? First of all you are not alone. More than 1.5 million Americans will file for bankruptcy this year alone. Filing bankruptcy can be stressful, but it is certainly not the end of everything, but in fact a chance for a new beginning. Seven years after the payment plan ends and the debtor officially receives their bankruptcy discharge the debtor can once again enjoy the liberation that comes along with sound money management and financial freedom. Those individuals post Chapter 13 bankruptcy filing who strictly followed their court ordered repayment plan now have a second chance at rebuilding their credit scores and their financial lives.
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However, debtors must beware that if they do not complete their repayment plan in the 3-5 year time frame that was agreed upon, they risk losing their bankruptcy discharge and debt forgiveness. The only way around this is if the debtor legitimately was unable to make the payments due to an accident, medical illness, or unemployment. The debtor in those circumstances would need to contact their bankruptcy attorney immediately to work something out with the court such as modifying the repayment plan or converting the Chapter 13 to a Chapter 7 bankruptcy. Filing bankruptcy is not only one's right but it is a testament to the fairness of the American court system that enables individuals with overwhelming debt a way out where they are protected under the law.
Putting a bankruptcy filing behind you is easy as long as the individual does not go back to the same financial mismanagement that got them into financial trouble in the first place. The debtor needs to use common sense when budgeting in the future. Being frugal and diligently watching one's spending to ensure that they don't incur more debt than the budget allows for and that the debtor earns is important. These careful practices will allow the debtor to quickly rebuild their credit, and we know that good credit scores following a bankruptcy filing are like a debtor's calling card. It sends a message to prospective creditors that the debtor has learned their lesson and they are responsible to pay their debts back just as they did in the Chapter 13 repayment plan. The debtor does not need to justify to a prospective creditor by email or phone that they are trustworthy.
After all their improved credit scores that are in black and white on their credit report will speak volumes as to the debtor's willingness and ability to pay back their debts. A Chapter 13 bankruptcy is certainly not a quick fix for severe debt, but it is a viable solution as well as a resolution towards regaining one's financial freedom.
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