Filing for bankruptcy can help give you a fresh financial start, catch up on mortgage or car payments and stop a garnishment. But once your case is over, what mistakes should you avoid? Below are the biggest mistakes I see people make after filing for bankruptcy:
Take out a new credit card: When you finish a bankruptcy case, many debtors are surprised to see many new credit card offers come to them in the mail. It can be tempting to take out these new credit cards with the intention of "improving your credit score". These cards will likely have very high interest rates. Many run into trouble when they take out these cards, charge them up immediately, and then realize the minimum payments are very high. Beware that many of these credit cards may also have a yearly fee. See my article link on how to improve your credit score.
Get a new car loan: In addition to new credit card offers, debtors are often barraged with car financing offers after bankruptcy! I have had clients try to get new vehicles after bankruptcy by going to a car lot, having a high pressure sales pitch, and signing on the dotted line for vehicle financing without understanding the loan. These loans are often high interest and the payments you are approved for may be much higher than you can actually afford. Don't end up in this situation yourself. This can be a quick ticket back into financial distress. Do not take out a new vehicle loan without carefully reviewing the paperwork, interest rate, your budget and the monthly payments.
Co-sign for a debt: I also see many debtors that have just finished a bankruptcy case end up in financial distress again after co-signing for a child, significant other or other friend or family member's loans. It does NOT matter if you are the "primary" or "co-signer" on a debt! You are still liable for the FULL amount of the loan! It is VERY common for a child to stop making payments on a loan without understanding the consequences, leaving you on the line for a loan. It is also common for couples that are NOT married to run into trouble if they break up. If you are not married, a Court cannot order the other person to make payments on a loan.
Above are the most common mistakes I see debtors make after bankruptcy. While you can re-file a new bankruptcy case, that is never anyone's financial goal. Make sure you are not falling into financial distress again by making one of these common mistakes!
Attorney Allison Greenlee Korr handles cases in Kalamazoo, Battle Creek and all surrounding counties, call today for a consultation.269-381-4471
*The above information is based solely on my personal credit observations. I am not employed by any credit bureaus and I am not a financial advisor. The above is not intended as legal or financial advice.