Myth #8: You May Never Own Anything Again
A surprising number of people believe that once you file for bankruptcy, no one will ever loan you money or give you a credit card, a car loan or a mortgage, and you will be permanently destitute, living on the street….but this is completely false.
As noted in Myth #3, the overwhelming majority of people who file for bankruptcy keep everything they have. And once you get your discharge, there are absolutely no restrictions whatsoever on what you can own.
This is usually the point at which clients say, “Yeah, but I have a bankruptcy on my credit report. No one will ever give me credit ever again.” I tell them that this is simply not true.
While a bankruptcy remains on your credit report for 10 years after you file for a Chapter 7, and 7 years after you file for a Chapter 13, most of my clients report that the longer that passes from filing the less impact the bankruptcy has on their ability to obtain credit. The reason is very simple: lenders think that they can make money off of you by lending you money–despite your bankruptcy.
Once you get your discharge–usually about four months after your Chapter 7 case is filed–you can buy, own and possess whatever you can afford. Virtually all of my clients receive a ton of pre-approved car loans and credit cards as soon as they get their discharge. Before the fiscal meltdown when homes actually had equity, many of my Chapter 13 clients were able to refinance while in their bankruptcy. Assuming you don’t run into new credit problems after your bankruptcy, you should be able to qualify for a regular FHA mortgage at regular interest rates two years after your discharge.
And if you want to check out what some very famous people did after they filed for bankruptcy (and, yes, they owned a whole lot of things afterwards), look at my list of Famous People Who Filed Bankruptcy.