Thomas F. Miles, Attorney and Counselor at Law
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Personal bankruptcy does not eliminate access to credit

When considering debt relief options, many California consumers place bankruptcy near the bottom of their list. A great many misconceptions surround personal bankruptcy, and lead many people to avoid seeking bankruptcy protection. This is unfortunate, because virtually no other debt relief choice offers a faster or more clear path toward a debt-free future and the chance to rebuild.

One of the top reasons that people avoid filing for bankruptcy is the belief that they will lose all access to credit for a long period of time following the completion of their bankruptcy case. In reality, however, nothing could be further from the truth. Consumers who emerge from bankruptcy are often flooded with offers for new lines of credit. The rates and terms may not be the most favorable at first, but in a relatively short period of time, it is possible to build a solid credit history and seek better terms.

In addition, many who file for bankruptcy are able to secure favorable car financing terms within a year or so from filing. Many can qualify for solid mortgage rates within two to three years. In fact, a recent study that compared individuals who file for bankruptcy and those who simply remained insolvent showed that the people who sought bankruptcy protection opened more lines of new credit than those who choose other debt relief options.

When considering personal bankruptcy, it is imperative that California consumers are working with the proper set of facts. The idea that access to credit will be severely limited following bankruptcy is simply false. Individuals who complete the bankruptcy process can look forward to access to credit and the chance to rebuild a strong financial future.

Source: Fox Business, "How Avoiding Bankruptcy Can Backfire", Steve Rhode, March 2, 2015

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