Is There Life After Bankruptcy?

Is there life after bankruptcy? As a lawyer practicing in the field of consumer bankruptcy for almost thirty years, here is what I see.

Over time we develop an odd relationship with debt. Paying the minimum due each month on credit cards. Unrealistically clinging to hope that the balance will be paid off someday. Transferring balances to lower interest cards.... Making friends with debt!

...As if this was normal. As if it's right that you and your family go without, as though the right to accrue wealth belongs to the privileged few.

Eventually there is a reality check. Understandably, new clients often feel hopeless. I often tell them that when one realizes one is in a hole it's time to stop digging.

Although bankruptcy is intended as a fresh start we are conditioned, culturally, to regard it as...the end. So, what comes after?

First, your bankruptcy discharge, a federal injunction which permanently prohibits the collection of most debt.

Ah, but "what will happen to my credit score?" many clients say, clinging to their dysfunctional relationship with debt. Folks, the goal is to not need credit. The rich know this.

But the need for some credit is a reality of modern life. To reserve a hotel room or buy a plane ticket you need a credit card. Many people do not know that the credit card industry has a niche marketing to people who have recently obtained a bankruptcy discharge. If you are careful and charge only what you can pay off each month, you will be able to re-build a decent credit score (low-to-mid 700s) within a relatively short time.

The key is to transition to living on a cash basis, whether you have credit or not.

After a bankruptcy case closes my clients go on with their lives. Even if I don't hear from them again, I know that my representation has made a powerful change in their lives. Often I do hear from old clients, and they are always grateful.

Recently I got a call from a former client. As a result of his bankruptcy discharge and living frugally he had accumulated enough wealth, so that he is looking to "pay it forward", by giving some of it to charity. On a modest income. After just a few years.

There is life after bankruptcy.