Getting Your Life Back After Bankruptcy
Life After Bankruptcy
What a relief it is to be discharged from all debt and start over after recovering from bankruptcy. The main issue that most people are faced with is rebuilding credit. However, if you were not straightforward with your papers, there are a few issues that are bound to arise after your debts are cleared. The discovery of non-exempt property could easily cause your discharge to be revoked by your creditor or trustee. In some cases, there are some debts that may not be clearly outlined in the discharge papers. As a result, your creditor may seek to make a claim on an already discharged debt. Discrimination may also arise, from either the government, or a private institution due to the history of your bankruptcy.
This paper seeks to explain, in sufficient detail, how to deal with these post-bankruptcy issues.
The Discovery/Acquisition of New Non-Exempt Property
If you fail to disclose some of your property when declaring bankruptcy, or acquire new property after filing, the trustee could seek to revoke your bankruptcy discharge. However, there is a likelihood that the trustee will not act unless the property in question is non-exempt, and has enough value to warrant a review of the case, seizure and sale of the property, and distribution of the proceeds to your creditors. Whichever the case, it is advisable to notify your trustee if you realize you are entitled to acquire property, 180 days after declaring bankruptcy. You should also report to your trustee, any omitted non-exempt property that you failed to include when filing for bankruptcy.
Creditor Claims Debts That Are Already Discharged
After bankruptcy, it may be difficult to determine the debts that you still owe, and those that have been discharged. The court won’t give you a list of discharged debts; instead, your discharge paper will only explain the debts that have been discharged in uncertain terms. As a general rule, all debts that are included in your bankruptcy documents are discharged except if a creditor objects to the discharge in court, or the debt is among the following classifications:
- Student loan
- Taxes that are overdue with three years
- Debts accumulated to settle non-dischargeable taxes
- Alimony or child support
- Court fees, penalties, and fines
- Debts arising from death brought by a DUI, or debts associated with personal injury cases
- Debts that failed to be discharged in previous bankruptcy cases due to misfeasance or fraud
- Loans from your retirement fund
- Certain cooperative and condominium fees incurred after filing for bankruptcy
If a creditor attempts to collect from you after a bankruptcy discharge, write to them telling them that your debts have been discharged. The other measure would be to amend your bankruptcy papers to include debts that have been discharged but are not listed therein. If your creditor is still obstinate, you could try re-opening the case and having the judge wipe out court rulings that favored the creditor before you had filed for bankruptcy.
There are cases where you are only option is to negotiate with your creditor for a payment plan. However, if all fails and your creditor moves to court, you will have to defend yourself and protect a garnishment, or any form of collection.
A Creditor Who Tries to Revoke Your Discharge
There are cases where a creditor or trustee may appeal to the court to reverse the ruling of your bankruptcy discharge. The first move you should make in such an instance is to consult with your bankruptcy attorney. The following are some of the grounds under which a creditor can seek a revocation of your bankruptcy discharge:
- Your discharge was secured through fraud
- You knowingly failed to inform your trustee about property you acquired after a divorce settlement, life insurance policy, or inheritance, within 180 days of filing for bankruptcy
- You failed to abide by a court order, or declined from answering a significant question that could have affected the ruling by the bankruptcy court
There are laws in place that protect people from post bankruptcy discrimination by both the government and private institutions.
The law prohibits government institutions from suspending, revoking, denying, or declining to renew a permit, license, franchise, charter, or any similar grant because you declared bankruptcy. However, debtors are not totally insulated from all the negative aspects that come with declaring bankruptcy. For example, lenders are allowed to pay attention to your bankruptcy record when reviewing your application for a credit extension or government loan. Basically, the bankruptcy codes prohibit the government from using bankruptcy to:
- Deny you employment or suspend you from work
- Deny or withdraw you from certain public benefits like public housing
- Deny you a state license or a contract
- Deny you or withhold your driver’s license or college transcript
After a government-related debt is discharged, it follows that; any acts against you that had risen from the debt must also end. For example, if the court took away your driver’s license because you did not pay a fine resulting from a vehicle accident, you will get your license back when this debt has been discharged. It is worth noting that this code applies to government denials premised upon your bankruptcy. Therefore, you may fail to get a job, loan, or housing from the government for other reasons, such as your future credit worthiness.
Private employers are prohibited from firing you or discriminating against you because you declared your bankruptcy. However, while employers are not allowed to fire you, they can decline from hiring you if you experienced bankruptcy. The law does not prohibit the other kinds of discrimination by non-governmental institutions.
The other issue that you are faced with, after being discharged from bankruptcy, is rebuilding your credit. Filing for bankruptcy can stay on your record for ten years following your discharge. Many creditors disregard bankruptcy records after five years. They usually look for steady employment, and a history of purchasing items or services on credit. It takes an average of three years to rebuild your credit, and start securing loans. The first basic step towards rebuilding your credit is making a budget that will help you avoid overspending, and start saving.