How Will Bankruptcy Affect Your Future

While filing a Bankruptcy will likely affect your credit in the short term, the long-term effects, with a few exceptions, will be minimum. Today the financial and credit world runs on “credit scores”. If an individual has a high credit score, 680 or higher, having a personal bankruptcy in one’s credit history will have little or no impact on getting a loan after a year.

The key to success is to rehabilitate your credit after you go bankrupt. As you restore your credit, your credit score will gradually rise to an acceptable level. How do you restore your credit rating? First, you must pay all your bills on time, cell phone, utilities, and credit cards. If you build a history of “no lates, no chargebacks, and no disputes”, after a period of 6-9 months, you will start to see your credit score improve.

If you retain one or two credit cards after filing a bankruptcy, start using those cards, prudently. But, you must pay the cards in full every month. If you stopped using all your cards before Bankruptcy, open one or two credit cards account for the sole purpose of building up your credit. In other words, do not charge anything on your credit cards you cannot pay off at the end of the month.

If you think that the banks will not issue you a new credit card after bankruptcy, think again. You will be amazed how quickly the banks will be willing to open a new account for a person who recently filed bankruptcy. They are in the business of lending money and they know, (1) You are no longer in debt and (2) You cannot file bankruptcy for another eight (8) years. So now you have become a good risk to the bank. For most banks, the scourge of bankruptcy is gone.

How will filing bankruptcy affect your present job or job prospects?

As for the effect of filing a bankruptcy on one’s present employment, it is highly unlikely that there will be any repercussions. In fact, unless you owe your company or your boss any money, they will never know you filed for bankruptcy.

There is no law that requires one to notify their employer if they file for bankruptcy. However, there may be a company policy in some financial institutions that require notifications. This would likely be limited to positions that involve the handling of monies for clients. That policy information must be easily ascertainable from your company.

As for a new employment, some companies may require a credit score report as part of the employment application. But not every company will disqualify an applicant if he has filed for Bankruptcy in the past. Obviously, the more time has passed since the bankruptcy, the less of an impact there will be on the job prospect.

In most cases, an explanation for the bankruptcy will satisfy the employer. This is especially true if the reason for giving Bankruptcy is beyond the control of the individual. Examples are, medical problems, divorce, the current financial crisis or torts against the debtor.

For more information email me at j.weinstein@jlwlawoffices.com or call me at 212-693-3737