Life has its ups and downs, which is a cliché, yes, but clichés are often rooted in simple truths. While some individuals and businesses won’t experience as extreme a financial event as bankruptcy, it certainly affects those who do file in many ways. The emotional and mental stresses of financial struggles aside, bankruptcy has its own effects on a filer’s life before, during, and after a case is closed. If you are considering filing bankruptcy in New Ulm, MN, Behm Law Group Ltd. can help you build a strong petition, meet pre-bankruptcy requirements, follow through with your case, and complete the process successfully with as little stress as possible.
Behm attorneys are skilled, knowledgeable, and experienced in handling a wide range of Chapter 7, Chapter 13, and Chapter 12 cases, and we have the means to protect and help you through your entire case. After a bankruptcy is completed, however, you may face a few challenges.
As with people who have not filed for bankruptcy relief and who may have bad credit, there are three instances when bankruptcy filers can be discriminated against.
- Loans: Your post-bankruptcy credit scores will not be what they were pre-bankruptcy. Your scores will take a hit, but you can still build up your score over time. Despite this, you may have a hard time getting new loans after filing. Lenders can turn you down for loans or charge higher interest rates on an accepted application. If you are in a credit counseling program, you may experience difficulties getting financing as well. Many people who file for bankruptcy relief may actually have great credit scores. However, they are typically unable to do anything even with great credit scores because their debt to income ratio is so skewed. Simply put, any great credit scores are entirely illusory because people simply have too much debt already and they do not have sufficient income to materially reduce that debt. Creditors will not make further loans to you when they see that your income is insufficient to pay and materially reduce the debt that you already have. After a bankruptcy is completed, you may have a poor credit score but, paradoxically, you may be more credit worthy than you were before. In many ways, bankruptcy “leans you up” debt-wise because you get rid of most, if not all, of your debts. In many ways, you are like Pinocchio because you don’t have any “debt strings” or you have a lot less of them. Additionally, you will not qualify for bankruptcy relief again for several years. Oftentimes, creditors, even the ones you may have included in a bankruptcy case, see this and they are incentivized to work with you again. They understand that they would get to be first or second in line to get paid by you after a bankruptcy instead of being tenth or fifteenth in line to get paid before a bankruptcy filing. They also understand that they could garnish your wages and levy on your bank accounts if you don’t pay them and that you would not be able to do anything about it because you would not qualify for bankruptcy relief again for several years. Therefore, even after a bankruptcy filing, creditors often consider you a very attractive credit risk.
- Employment: Unfortunately, private employers can pass judgment on your application if they know you have filed for bankruptcy or see that you have a lower credit score than other applicants. Most employers wouldn’t want to hire people who are handling a personal issue as significant as bankruptcy or poor finances as there is a chance the financial issue will affect their job performance. Being open and straightforward with employers can help you get through this prejudice, but sadly, it won’t always help them ignore your circumstances. However, this also happens frequently with people who have poor credit scores and who haven’t filed for bankruptcy relief. Often, potential employers will see that your situation is more manageable and secure after a bankruptcy than it was before and that you have been freed of the mental anguish and emotional stressors that you had before. They know that they will not be served with a garnishment summons on your wages because your debt issues have already been taken care of.
- Renting: Like lenders and employers, landlords may also tend to discriminate against potential renters based on their credit scores or recent bankruptcy cases. Understandably, landlords need tenants to pay rent on time. This means they may place judgment on potential renters based on their credit scores. In the eyes of a landlord, it’s simpler and easier to judge based on credit scores than the many other factors that could be involved.
In general, you can avoid these post-bankruptcy issues, but if you do experience them, there are ways to navigate these difficulties. To learn more about the process of filing bankruptcy in New Ulm, MN, and life after filing, contact Behm Law Group Ltd. at (507) 387-7200 today.