Bankruptcy

Credit after Bankruptcy

By Cathy Moran, California Bankruptcy Lawyer

Will I ever get credit again?  is the query from prospective bankruptcy clients.   Before the Great Recession that we are living through, my answer was a confident,  “Absolutely“.    Now I’m not sure that what I’ve learned about bankruptcy and credit over 30 years of practice is of much use predicting the future.

It may be that credit in the future will be more limited and more difficult to get for everyone.  Witness the struggles of those we’d see as strong candidates for home loans trying to get mortgage money.  Lenders are exceedingly caution in general.  It’s hard to argue that the liberal credit  all free-for-all that characterized the past decade was real prosperity.

One thing I’m confident of is that in an era of more restrictive credit, those with a stronger balance sheet will be better candidates for loans even if the balance sheet was cleaned up by means of bankruptcy.  No longer will someone with credit balances that are several multiples of their annual salary be seen as credit worthy.

And I am even more insistent that, even if it meant a period without access to credit, a huge percentage of our population would be better off discharging impossible debt burdens in bankruptcy and moving their families to a cash economy.  One attorney’s views….

Full post as published by Bankruptcy Law Network on March 04, 2010 (boomark / email).