Bankruptcy can provide relief from a wide range of burdensome debts. However, it will also have a significant impact on several areas of your life in the years to come. It can affect employment, banking, insurance and housing. Fortunately, the negative consequences eventually subside and there are ways to completely avoid some of them.
A bankruptcy primarily affects your life because it appears on your record and reduces credit scores. Potential employers, lenders, landlords and insurers often check credit reports before accepting applications. The good news is that they consider older bankruptcies to be less important, and the event vanishes from your record after 7 to 10 years.
Although you're unlikely to locate an insurance company or bank that doesn't check this data, it's not unusual to find bosses and landlords who don't use credit information. Small businesses and nonprofit groups are generally more likely to hire or serve people who have declared bankruptcy in the recent past.
Loans gradually become more accessible after you go bankrupt. You might qualify for a mortgage in one year, but you would pay rather high-interest rates. It takes around three years to get loans with favorable terms. You won't have to wait as long if you can benefit from an FHA mortgage. Likewise, government-backed student loans remain available to citizens who have recently gone bankrupt.
Some people find it difficult to open new checking accounts after bankruptcy, especially when the process discharges unpaid banking fees. It's best to keep an existing account if possible. However, many locally owned banks will continue to let you open a savings account. The same goes for "second chance" checking accounts, but these usually have high fees.
The bottom line is that bankruptcy could result in higher borrowing, banking and insurance costs for several years. You may need to fill out more applications before successfully gaining employment or an apartment. A person can avoid some of these problems by retaining the same job, home and bank account in the years following bankruptcy.
If you or someone you know need a bankruptcy attorney, contact the team at Vivian Law Firm today.