Avoiding a Second Bankruptcy

Client Debt Stories: Michael M. - Bad Credit Decisions

Consolidated Credit gave one client a second chance instead of a second financial disaster.

One bankruptcy can be stressful. A second bankruptcy? It’s hard to even imagine.

Unfortunately, this is what Michael M. found himself considering a few years ago before he found Consolidated Credit. He had filed for bankruptcy once before, but he wasn’t in the clear yet. “My life was in ruins and my credit was almost nonexistent,” he said. And with $18,000 of debt left, it was no wonder he felt lost.

The consequences of a second bankruptcy

Bankruptcy is no joke, especially for your credit. It stays on your credit report for up to 10 years. Your credit score can take a hit and lenders are less likely to think you’re creditworthy. This can make things like getting a mortgage or an auto loan much harder than it needs to be.

Additionally, the filing process itself can be incredibly expensive. Bankruptcy filing fees usually cost a little over $300, but attorney fees can be in the thousands.

Obviously, the last thing Michael wanted to do was file for bankruptcy a second time.

In fact, it may not have been an option for him at all. If his first bankruptcy was a Chapter 7, then he would have to wait 8 years from the filing date to file another Chapter 7 or 4 years to file Chapter 13 bankruptcy. If his first bankruptcy was a Chapter 13, he would have to wait 2 years to file another Chapter 13 or 6 years to file a Chapter 7.  This is because the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) limits how many times you can file within a certain period of time.

Finding another way

Luckily, Michael found Consolidated Credit and was able to avoid a second bankruptcy. He spoke with a certified credit counselor and they decided that the best solution for him would be to enroll in a debt management program, or DMP.

The best part? A DMP and Chapter 13 bankruptcy both have a debt repayment period of approximately three to five years, but a DMP comes without all the credit damage!

The program consolidated all of Michael’s monthly payments into one lower monthly payment. It also halted the daunting calls from creditors. Michael no longer had to deal with all of his individual bills each month. Instead, he made one simple payment through Consolidated Credit and could rest assured that his debt was being taken care of.

“The plan was affordable, and I wasn't getting threatening calls demanding payments I couldn’t afford. It was a load off my mind.” – Consolidated Credit Client, Michael M. #nobankruptcy Click To Tweet
Without the threatening calls and high monthly payments holding him back, Michael could move forward with his life. Not only were his personal finances in order, but he was also happier. “Time went by and before you knew it my debt was going down,” he said. “The light at the end of the tunnel was starting to brighten.”

Taking advantage of a second chance

When the debt management program ended, Michael had paid off all his debt. Along the way, he learned something just as valuable – how to manage his money more effectively.

“I kept my balances low and would pay them off early.” Michael explains.

“My credit scores started to soar. Today all three credit bureau scores are 812 and still rising. I am careful not to spend more than I could afford.” – Consolidated Credit Client, Michael M. #nobankruptcy Click To Tweet
With the help of Consolidated Credit’s debt management program, Michael not only avoided a second bankruptcy, but also bounced back from his first bankruptcy. His credit counselor helped him build a budget and stick to it, and Consolidated Credit offered many free financial education resources to help him take back control. Now, Michael always pays more than the minimum payment on his credit cards. He’s more confident with his money and has the financial skills to avoid any future money disasters.

“Consolidated Credit saved my life and I would recommend them to anyone who has a debt problem and bad credit and needs help.” – Consolidated Credit Client, Michael M. #nobankruptcy Click To Tweet
Stuck in a situation like Michael’s? Before you start preparing to file another bankruptcy, call Consolidated Credit at 1-888-294-3130 for a free debt and budget analysis.