The law allows you, as an individual, to represent yourself in bankruptcy court, but you should understand that many people find it extremely difficult to represent themselves successfully. Because bankruptcy has long-term financial and legal consequences, you are strongly urged to hire a qualified attorney.
To be successful, you must correctly file and handle your bankruptcy case. The rules are very technical, and a mistake or inaction may affect your rights. For example, your case may be dismissed because you did not file a required document, pay a fee on time, attend a meeting or hearing, or cooperate with the court, case trustee, U.S. trustee, bankruptcy administrator, or audit firm if your case is selected for audit. If that happens, you could lose your right to file another case, or you may lose protections, including the benefit of the automatic stay.
The judge can also deny you a discharge of all your debts if you do something dishonest in your bankruptcy case, such as destroying or hiding property, falsifying records, or lying. Individual bankruptcy cases are randomly audited to determine if debtors have been accurate, truthful, and complete. Bankruptcy fraud is a serious crime; you could be fined and imprisoned.
Bankruptcy is not a moral decision. It is a legal choice made when the debt situation is hopeless. I am certainly not recommending bankruptcy as a casual solution and I’ve seen very few people who use it that way. In fact the percentage of people who file bankruptcy more than once is very small.
While a bankruptcy will remain on your credit report for up to 10 years (not 7, and not 8, not even 9, but 10 years, according to the federal Fair Credit Reporting Act), that doesn't mean your credit is shot for 10 years.
All of my clients wonder about this. My answer is that you will get credit card offers galore immediately after your bankruptcy is discharged. There are 3 basic reasons for this: 1. You just got rid of all your debt, and so the credit card companies assume you now have some disposable income; 2. Because you filed, you must feel bad, so you accept the punishment of a 25% interest rate, which means more money for them; and 3. You can't file again for another 8 years. You are their favorite kind of borrower!
With that in mind, I can say that, depending on all the other factors that go into acquiring credit, my clients experiences are typical: within 6–9 months of the discharge, they can obtain credit for a car loan at decent rates; within 1–3 years, they can qualify for a mortgage or refinance their mortgage (the time depends on the lender).
I know this is true, because inevitably at the three year mark I get an email or phone call from my clients asking for their bankruptcy paperwork; their mortgage lender wants to review it, and they lost the copy I gave them years ago.
It takes hard work, being good with the credit you get after the bankruptcy, maintaining a good job, and spending less than you earn, but you can rebuild your credit very quickly after a bankruptcy. It’s legal definition is: fresh start. It is not a punishment or a sentence. It wipes the slate clean immediately.
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