[COLUMN] How is life after bankruptcy?

MANY people who need debt relief are afraid to file for Chapter 7 or Chapter 13 because they fear that life after bankruptcy will be difficult. The fear is that bankruptcy will prevent them from getting new credit cards, buying a car, buying a house.

Some even believe that they won’t be able to freely travel in and out of the country after bankruptcy. Or, the bankruptcy may affect their immigration status. All of these fears are baseless.

The fact is that life after bankruptcy is great! Whether or not you believe that life is great after bankruptcy doesn’t change the fact that it is great.

If I were to tell you that Hawaii is beautiful, that it’s like paradise, but you have not been there, it’s going to be hard for you to believe that Hawaii is indeed a beautiful place.

First, bankruptcy is confidential. Nobody knows about it unless you tell everybody about it. In most bankruptcy cases, the debtor keeps everything that he owns because he is able to exempt them under applicable bankruptcy law. Most debtors keep their houses, cars, furniture, retirement accounts, and everything else that they own when they file for bankruptcy. There is no sign on your door that says you filed for bankruptcy.

Second, many successful people have filed for bankruptcy to obtain a fresh start in life without accumulated debt. For instance, Walt Disney filed for Chapter 7 twice before his Disney empire became a global success; Star Wars Edge of the Galaxy, anyone? Milton Hershey filed for Chapter 7 before he became the biggest Chocolate business in the world; Reese’s Pieces, anyone? President Trump’s businesses filed for bankruptcy four times in the 90s. Yet, he has been president of the United States of America since 2016.

Third, the sole purpose of bankruptcy is to give the debtor a fresh start in life without the burden of accumulated debt and to make the debtor productive again. Just imagine having $50,000 of credit card debt. You need $1,500 a month to keep them current. That’s $18,000 a year, $36,000 year two, and $90,000 by year five. In other words, the debtor would have paid out $90,000 in five years to keep $50,000 of credit cards current, but guess what? He still owes the same $50,000 in year five after paying in $90,000 to keep them current. The debtors in this situation are like hamsters in a wheel. They keep on working and running in the wheel but don’t go anywhere because they are no longer productive. Bankruptcy allows them to wipe out the $50,000, start fresh without the $50,000, so they can be productive people again.

In this example, the debtor will save $1,500 a month, and in five years will save $90,000. With these savings, he can buy stocks or invest in real estate. Buy a house. Invest his money wisely. Then the $90,000 will keep on growing until it becomes $1.0M! Then debtor becomes a millionaire! And if the debtor is as smart as Walt Disney and Milton Hershey, he can become a billionaire! No kidding. This is true.

Fourth, rebuilding credit score is fast and easy after bankruptcy! As soon as you get the discharge order, and want to buy a Camry, for instance. Just walk into any Toyota dealership but make sure you bring your discharge order because they will ask for a copy of it. Let’s say you got your discharge order today. Bring it to any Toyota dealership tomorrow and they will finance the purchase of your car of choice. Of course, your interest rate will be higher than normal. But if you wait a year or two after your discharge to buy the car, your interest will be much lower. The point is, you can re-establish credit very fast as soon as you get your discharge. In three years, you can buy a house.

Many lenders will provide you with a mortgage to buy a house in year three 3. In six months from discharge, you will be getting new credit cards preapproved sent to you in the mail. Yes, you will get new credit cards, no problem. Some banks specialize in giving people who have filed bankruptcy new credit cards because they can’t file another bankruptcy for another eight years. There’s a reason for everything under the sun, right? There’s a time to be born, a time to die, a time to sow and a time to harvest (Ecclesiastes 3:1-11).

Fifth, there’s no restriction on setting up new businesses after bankruptcy. Neither is there any restriction on traveling in and out of the United States. Debtors who file for bankruptcy can freely set up new businesses like Walt Disney and Milton Hershey after bankruptcy. It’s a fresh start in life without accumulated debt. Let’s say you file for Chapter 7 today and you have to travel to Greenland next week to assure Greenlanders that they don’t have to sell themselves to the United States. Can you do that? Sure you can.

Sixth, bankruptcy does not affect your immigration status in any way, shape or form. To get your green card, if your income is not enough, you need a sponsor with enough income to qualify you for permanent residency. If you have enough income and don’t need a sponsor, the fact that you filed for bankruptcy doesn’t affect your qualification for permanent residency.

Bankruptcy law prohibits the Federal government from discriminating against someone who has filed for bankruptcy. I have many clients in the process of getting green cards or citizenship in the last 30 years.

None of them have been affected negatively by their bankruptcy filing. They are all permanent residents or naturalized citizens now. This fear that bankruptcy will affect immigration status is purely psychological and has no basis in fact or law.

So take it from the lives of Walt Disney and Milton Hershey, life after bankruptcy is great, beautiful and productive! Indeed life after bankruptcy is prosperous and abundant! From Chapter 7, Walt Disney and Milton Hershey became, billionaires with global businesses, literally true!

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Disclaimer: None of the foregoing is considered legal advise for anyone. There is absolutely no attorney client relationship established by reading this article.

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Lawrence Bautista Yang specializes in Bankruptcy, Business, Real Estate and Civil Litigation and has successfully represented more than five thousand clients in California.  Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 20274 Carrey Road, Walnut, CA 91789 or 1000 S. Fremont Ave., Mailstop 58, Building A-10 South Suite 10042, Alhambra, CA 91803.

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