One thing that people sometimes say about personal bankruptcy is that it follows you around for years. It’s true that getting credit might be difficult (though not impossible) for a while. But not for the rest of your life.
Depending on how you use Chapter 7 or Chapter 13 bankruptcy and how you handle your finances afterward, you can begin rebuilding your credit immediately. You will soon qualify for certain types of credit. Keeping up on those and other payments will, over time, show your trustworthiness to banks, credit card companies and other lenders. Within several years, you should be able to pursue a conventional mortgage, car loan or small business loan at reasonable interest rates.
Bankruptcy despite $108 million fortune
You may remember that former NBA player Antoine Walker declared Chapter 7 bankruptcy in 2010. His case earned a lot of media attention at the time because Walker earned $108 million during his long career in professional basketball. Looking back, Walker notes that he found himself a millionaire at just 19 years old after growing up in poverty. He had no education about how to manage money and quickly began spending his fortune on cars, clothing and jewelry. Even after his playing career ended in 2008, Walker continued to spend lavishly and give financial help to friends and relatives. The final blow was a series of real estate investments that went bad during the recession of 2008-09.
‘Comfortable lifestyle’ three years after bankruptcy
Bankruptcy went fairly smoothly for Walker. Within two and a half years after filing, he had rebuilt his financial life. While not as wealthy as he was during his playing days, Walker says he has “a comfortable lifestyle.” He consults for a company that teaches professional athletes how to manage their money.
Few, if any, of the people reading this blog will be at the income level Walker used to earn. But their debt may be just as overwhelming. Using bankruptcy to its fullest advantage requires careful consideration and timing, but when used correctly, it can help you make a fresh start.