How Bankruptcy Affects Me After Filing
Declaring bankruptcy will have consequences, but in most instances, the consequences are no worse than what you will face if you are unable to pay your bills. The negative effects of bankruptcy will be worse in the first year but will lessen as time passes. Taking steps to rebuild your credit after bankruptcy--such as making all payments on time each month--can have a positive effect on how quickly you recover financially.
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Nondischarged Debts
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Debts such as child support, unpaid taxes and student loans are generally not discharged by your bankruptcy. You must continue paying the obligations that are not discharged by your bankruptcy. If you find yourself unable to pay these debts after bankruptcy, you will have to contact the lender or, in the case of child support, the court to work out a repayment plan.
Reaffirmation
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Lenders for your secured property, such as your mortgage or auto loan, may contact you asking to reaffirm the debt if you have continued to make payments on your property. Reaffirmation is a renewal of your agreement to pay your debt as previously agreed. Without reaffirmation, you are not legally obligated to continue to make your payments, and the lenders, although able to repossess the property, cannot sue you for any balances on the loans.
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Future Credit
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Bankruptcy will remain on your credit report lowering your credit score for up to 10 years. Low credit scores can make obtaining new credit difficult and increase the interest rates on loans that you receive. If the bankruptcy remains on your report after 10 years, you will have to dispute the items in error with the credit bureaus.
Automatic Stay
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Until you receive the discharge or dismissal of your bankruptcy, creditors are legally barred from contacting you. Creditors can contact the court and request that the stay be lifted. The creditors that most commonly make this request are creditors of secured loans of high value. The stay does not prevent creditors from continuing collection activities against co-signers or guarantors of loans.
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