Life…after bankruptcy

Are you tied up in debt? Should you file bankruptcy? 

Is it better to live with this debt and keep making the minimums?

What’s going to happen to me if I file bankruptcy?


Every one of these are Good questions.  I applaud people who realize that debt and debt relief have consequences for the future. We’ve written about it before. People are scared of what they don’t know and we all know that you’ve heard all the horrible myths about bankruptcy.  

Now that we have looked at this we have to turn the question around:  what will life be like if you continue on as you’re doing now?

Spending your life in debt

Servicing debt cuts your options for the future.  Think about it.  A large portion of your paycheck is already spent before you even see the check. It doesn’t matter if it’s a credit card bill, a doctor bill, the light bill or a payday loan, you’re locked in.  

Not long ago, the government published a study that stated most Americans couldn’t even handle a $500 emergency without borrowing money.  Even more than that, you’re also likely not making provisions for your retirement because you’re spending all your money paying for the now.  

Lots of people tell me they don’t think they’ll ever retire. Some say it because they like what they do…but most can’t make ends meet without a job. What you don’t consider now is 1. You will get old (unless you drop dead) and the job choices you have will diminish the older you get.  The older you get, the less able you are to handle the rigor of a full time career. 

Beyond that, we all know that stress kills.  Study after study show the negative side effects of stress.  Jobs are stressful. Do you really want to spend your golden years scratching and clawing at a job just to get by? 

After bankruptcy

So, you pulled the trigger and made it out of debt.  

What now?

Here’s a list of the negative aspects of filing for bankruptcy.

  • Credit (at least in the short term) is more expensive
  • Bankruptcy will show on your credit report
  • If you rent some landlords may be uncomfortable
  • Some new employers will have issues. 

Time heals all wounds and that is true even of bankruptcy.  This needs to be weighed against the negatives of continuing in debt. 

Everyone always worries about their credit score but let’s be honest,  if you’re this deep in debt, it’s probably not great anyways.  The biggest thing is to look at your debt to income ratio. That gets better immediately.   Don’t believe me, just ask the CFPB

The Benefits of Bankruptcy

Bankruptcy might be the first step to improved financial health.  You can start with more financial alternatives and the chance to do things differently.

Bankruptcy may even be a step in better physical health. Stress takes an enormous physical toll on your body, not to mention the mental health implications.  Bankruptcy, ultimately wipes out that stress so people can go on living their lives.  Bankruptcy also enables you to save for the future.  It wipes clean all the things that were nickel and diming your paycheck to death and allows you to finally start building that nest egg to help you with the unexpected or to save for retirement.