Chapter 7 filings usually stay on your Georgia credit report for ten years. That’s a long time, but it certainly is not forever. Moreover, the discharged debts, like credit card accounts, fall off much sooner than that. Additionally, most new lenders only scrutinize the last six months or so of credit history. 

Finally, although a bankruptcy filing is a very big black mark, it looks better than repossession, foreclosure, and some other adverse entries. If debtors file bankruptcy, they do something to take control of their debt problems. Even in a Chapter 7, bankruptcy usually involves some debt repayment. Entries like repossession and foreclosure indicate that the debtor quit.

A Georgia bankruptcy lawyer does more than guide you through the process and represent you in court if needed. Our attorneys also give debtors the tools they need to rebuild their credit scores as quickly as possible. By following a few steps, after a few years, most of our clients forget that they filed bankruptcy.

Benefits of Bankruptcy in Athens, GA

Bankruptcyphobia is not a real word, but perhaps it should be. Many people have an irrational fear of bankruptcy, mostly because of board games like Monopoly. A Monopoly bankruptcy ends the game, but in real life, bankruptcy is a fresh start.

Automatic Stay in Georgia

As seasoned Chapter 7 Bankruptcy lawyers, we know that Section 362 of the Bankruptcy Code is unique in American law. No other legal provision automatically halts creditor adverse action, such as:

• Repossession
• Eviction
• Foreclosure
• Wage garnishment
• Collection lawsuits
• Harassing phone calls

The Automatic Stay is, well, automatic. Debtors need not show evidence of lender negligence or fraud. In most cases, the Stay remains in effect as long as the bankruptcy is pending. Moneylenders can only bypass the Stay if the judge grants special permission. And, a Georgia bankruptcy lawyer knows how to keep that from happening.

Asset Protection in Georgia

Section 362 is not the only protective provision in a bankruptcy. Georgia also has some of the broadest bankruptcy exemptions in the country. Even if there is a bankruptcy on your credit report, creditors cannot seize and liquidate things like:

• Retirement account
• Home equity
• Government benefits, like VA benefits
• Personal property
• Current wages
• Motor vehicles

These assets are exempt even in Chapter 7 “liquidation” bankruptcies. The L-word only applies to nonexempt assets, such as large vacation homes and yachts. And, if you have such assets, you probably do not need to file bankruptcy.

Some Bankruptcy Success Stories

Henry Ford is perhaps the most famously successful post-bankruptcy filer in American history. In fact, this industrialist and entrepreneur filed bankruptcy twice before he found success.

Ford’s first motor vehicle invention was the 1896 quadricycle. He quit his day job to produce the vehicle full time. That was a mistake. Because he could not balance the accounting aspects and production aspects of his business, Ford could not repay his investors, and his Detroit Automobile Company filed bankruptcy.

A few years later, Ford started the Henry Ford Company. But Ford was an inventor and not a marketer. The company produced high quality products, but they did not catch the public’s eye, and sales never got off the ground. So, this company filed bankruptcy as well.

These two bankruptcies taught Ford some very hard lessons, which he learned well. His third company, the Ford Motor Company, was infinitely more successful.

Other post-bankruptcy success stories include personal finance guru, Dave Ramsey and chocolate magnate, Milton Hershey.

Your Own Success Story and Georgia Bankruptcy Lawyers

These individuals made the most of their fresh starts. Our Georgia bankruptcy lawyers help you do the same thing.

Responsible credit use is a good example. It might seem odd to tell former bankruptcy debtors to take on more revolving debt, but that’s one of the fastest ways to raise your credit score. Our Georgia bankruptcy lawyers connect debtors with lenders who work with bad credit borrowers. Most people charge something every month, pay off the balance every month, and watch their credit scores go up.

In general, the best way to deal with lenders is to be upfront about the filing and the reasons for the filing. At that point, most lenders are willing to move forward, mostly because they can charge higher interest rates in these situations. If the lender does not want to extend credit, do not take it personally. Just remember that there are plenty of other lenders out there.

Additional Ways to Improve Your Credit Score After Bankruptcy

It’s important to remember that everyone’s financial situation is unique. Although the information presented here is grounded in a thorough understanding of these topics, you should not make the mistake of assuming a blog entry is a replacement for professional advice. You should instead discuss these issues with experts if you are worried about how you may improve your credit score after filing for bankruptcy.

That said, the following general tips are often helpful in these circumstances. If you wish to optimize your credit report after a bankruptcy, you can:

• Learn everything you can about proper credit usage and overall personal finance. This may seem like an obvious tip, but it’s a very important one, and thus deserves a spot on this list. If you prioritize consistently learning about personal finance, you’ll minimize the chances of finding yourself in a difficult financial situation in the future. Just make sure you’re turning to genuinely reliable and authoritative sources of information when researching this topic.
• Check your credit score. Many people mistakenly believe that checking their credit scores will negatively affect them. That’s actually a myth. Although some types of inquiries into a credit score can result in said score going down, when you check your own credit score via a reputable source, you don’t have to be concerned about any unwanted negative effects. By monitoring your credit score on a consistent basis, you’ll be more likely to quickly learn what does and does not work in regard to your attempts to improve it.
• Save money in an emergency fund. It’s not uncommon for people to file for bankruptcy in the first place because unexpected life circumstances changed their financial situations. You can guard against this happening to you by saving money you may need if emergencies arise.
• Work with cosigners if absolutely necessary. You need to be very careful when asking someone to cosign a loan, as they will also be financially affected by your inability to pay back that loan if you fall behind on payments once again. However, if you’re thoroughly confident you will be able to pay back a loan, but you’re struggling to overcome the degree to which filing for bankruptcy has impacted your credit report, it’s possible there’s someone in your life who is willing to help you get back on your feet financially. Again, you merely need to responsibly consider the risk you’re asking someone to take on in these circumstances.
• Become an authorized user. This is an option that’s similar to asking for someone to be a cosigner, but one that may potentially be less stressful for all parties involved. When you become an authorized user, you’re basically being added to someone else’s credit card account. That means payments made via that account will impact your own credit score. Naturally, you don’t want to abuse this privilege if someone allows you to become an authorized user, and you want to be certain the person whose account you’re being added to is one who you can trust to make payments on time.

It’s worth noting that many people find their credit scores are higher a year after bankruptcy ends when compared to the time immediately before they began the process of filing for bankruptcy. If you practice smart financial habits, filing for Chapter 7 bankruptcy doesn’t have to negatively impact your credit in the long run. It can even help you improve your credit over time. That said, it can’t be emphasized enough: consulting with a legal professional is among the best ways to learn more about your options when a bankruptcy threatens to harm your credit score.

How to Explain a Bankruptcy

There may be instances in the future when you’re applying for a loan and you must explain a bankruptcy. Again, because everyone’s situation is somewhat unique, the way in which you may go about doing so can depend on the specific details of your case. However, what’s most essential is that you not be dishonest when writing a bankruptcy explanation letter. 

If you ever have to write a bankruptcy explanation letter, you don’t necessarily want to make any statements that indicate you had to file for bankruptcy simply because you were unreasonably irresponsible. On the other hand, you do want to explain why various life circumstances may have resulted in you finding yourself in a financial position that made filing for bankruptcy a wise decision.

You also should explain that the bankruptcy has been dealt with. Your goal is to indicate to a potential lender that you have taken appropriate steps to address the situation and improve how you manage your finances going forward. Although you may not need to work too substantially with an attorney during this process, when you first file for bankruptcy, your lawyer can potentially offer advice on how to explain your bankruptcy in the future.

Connect With a Judicious Chapter 7 Bankruptcy Attorney Now

Chapter 7 stays on your credit report for ten years, but the adverse effect fades much faster. For a free consultation with an experienced Georgia bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. on (706) 843-2905. After-hours, virtual, and home visits are available.

 

Originally published September 16, 2020 and updated October 18, 2021