Q: I’m considering filing for a Chapter 13 bankruptcy, but my biggest concern is what happens after I emerge from bankruptcy. How do I move forward with that much damage on my credit report? How do recover? I’m worried that my landlord could evict me even if I am current, and that I won’t have enough credit to get a decent place to live, or that I’ll end up having to move into the place where I have my office space in violation of my lease. Help?
A: Let’s knock off the big worry first. First, the legal rights and responsibilities of both landlords and tenants are very clear and are strictly governed by Florida law. The automatic stay does affect your lease, as it suspends all debts and obligations except for a very few. If the trustee feels that your rent is exorbitant and unaffordable, the trustee may order the lease to be terminated. You may be required to furnish proof the trustee and the landlord that you can continue paying rent during the bankruptcy, and if you fall behind on rent during that time, the landlord may ask the trustee to terminate the lease and start eviction proceedings. The landlord may then petition for back rent as a creditor and retain whatever deposits are in their possession. If your lease ends in the period during which your filing is being overseen by the trustee, your landlord may opt not to renew the lease and give you notice to move out.
As for the steps you can take to recover from bankruptcy, you will be relieved to know that as long as you manage your finances responsibly – paying bills on time, building new credit – that the bankruptcy will have less impact on your credit until it falls off entirely. Start with these steps,
- Budget. Create one each month to make the most of your income. You can use online apps for basic bookkeeping and budgeting, often for free.
- Get a piggy bank. Start building your savings back up with the simplest method. Put your change in the pig at the end of each day, you can even put in dollar bills, and watch your savings grow.
- Check your credit reports. Your bankruptcy will remain on your report for ten years, and late payments or delinquencies stay on for seven years.
- Start shopping for credit. Look at secured loans, secured credit cards, and deal only with reputable companies.
- Pay your bills on time. I can’t tell you how much this matters. It’s the basic building block of a good credit rating.
- If it’s too expensive, shop for a better deal or get rid of it. This includes the cable service, your car insurance (which is often pegged to your credit score), anything that is not vital to your well being or ability to work.
I’d like you to come into our office for a free consultation so that I can look over your paperwork and get a better idea of your situation. I can’t really offer anything but the most general advice over the blog. Give us a call and let’s get to work on fixing your situation.