Tell Your Bankruptcy Story: Your Very Own Sound Bite - Westgate Law

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Tell Your Bankruptcy Story: Your Very Own Sound Bite

bankruptcy, southern california bankruptcy, filing bankruptcy, dealing with debt, westgate law, bankruptcy attorney, bankruptcy lawyer, southern california bankruptcy attorney, southern california bankruptcy lawyer, rebuild credit after bankruptcy, credit score, perfect credit after bankruptcyAccording research, over 80% of bankruptcy petitioners have dealt with: illness, divorce, or unemployment. What’s your bankruptcy story? Prepare your very own 30-40 second sound bite explaining why you filed for bankruptcy protection. This is important because as you begin your quest towards a credit score of 720, you are going to be talking to a lot of loan officers and/or underwriters. They’ll need to know what happened, but even the most sympathetic of loan officers won’t want to hear your entire life story. It’s important to be thorough, but it’s more important to be concise. They need to know what happened without having to cancel their lunch to stay on schedule.

Don’t be tempted to think that your particular situation is so horrible and unfair that you are the exception to the “sound bite” rule. Future lenders do not care even if you have a valid right to complain about your previous financial dealings. They may even see your tendency to “blame” someone else for your past financial trouble as a negative sign of your future ability to behave responsibly. The inability to stop voicing your complaints and blaming others for your bankruptcy, etc. can actually turn into an impediment as you attempt to reestablish credit. Even if you have a viable reason to complain, find a way to suppress your need to lash out against (or in front of) future lenders.

Common Reasons Bankruptcy Filers Have to Complain and Blame:

  • I was denied my loan modification request! It was completely unfair.
  • I was tricked into a predatory loan.
  • I signed documents that were designed to give one impression when they actually meant something completely different.
  • I just needed to make a lower payment and the credit card company sued me!
  • I cosigned a loan and the other party could not make their payments. Then lender sued you.
  • I was sick and my creditors would not allow me to miss any payments.
  • I lost my job (or had my income cut drastically) and could not stay on top of all of my monthly payments.

These are just a handful of the “valid” reasons that could serve as the starting point for a long, heart felt rendition of “My Life Story Leading Up to Bankruptcy.” I’m sure you have many reasons to complain. I’m sure there are numerous others who are “to blame” in whole or in part for circumstances that led up to your bankruptcy. You could be right about ALL of it, but the fact of the matter is that you want what this future lender you are sitting down with has…credit. And you’re only decreasing your chances of getting it by providing them with a lengthy, blame-filled tale of woe. When they ask what happened, give them the sound bite.

When you indulge the desire to share the full version –the tale of woe that delineates all the blame in the correct areas, lenders are only thinking one thing. They’re thinking that you could not live up to your commitments – end of story. So skip the long version and go with the summary they would publish for the Reader’s Digest version. Develop that concise explanation for the reason you filed bankruptcy. This is your 30-40 second sound bite explaining what happened and why it will not happen again.

Sound Bites that Might Work for You:

A chronic illness in the family resulted in lost hours at work and it was impossible to catch up after the fact.

Medical bills piled up after a surgery forcing us into bankruptcy.

An isolated event made bankruptcy necessary (i.e. a market crash, the closure of your business, a natural disaster, etc.)

Divorce caused household bills to double. The increased bills on top of attorney fees, filing fees, moving costs, etc. was too much for the limited income and we resorted to using credit cards to get back on our feet. The prospect of covering costs for two households and the mounting credit card debt was too much.

During a period of unemployment, our savings were diminished/eliminated and credit became your 401(k). Even if you started working again, the debt you incurred might have become too much to pay off. Other monthly bills will still be there when you start working again, but there will be the new addition of credit card debt with the associated monthly payments that will be impossible to manage even if you cut back on expenses.

You signed as a cosigner on a loan for a family member or friend and they were unable to make their payments for the loan. Due to your cosigner liability, you tried to make the payments, but you weren’t able to continue due to limited resources. The lender aggressively pursued you when you couldn’t afford the payment.

You have too much student debt. In combination with unsecured debt that has amassed over the years, you aren’t able to find jobs in your field that pay enough to cover all the payments. Forced to choose between paying your student loan payments and credit card payments, you turned to bankruptcy.

You were unable to modify your home mortgage loan. When the payment adjusted, you weren’t able to stay on top of it without incurring credit card debt.

If your sound bite, no matter how you word it, makes you sound like you were irresponsible with your money, don’t try to hide it or rewrite history. You don’t have to broadcast it, but being honest and accepting your mistake will go a long way towards satisfying some lenders. Taking personal responsibility will not guarantee approval, but it will indicate a growth and maturity to the new lender and hopefully leave them with the impression that you are ready for a second chance.

If you need answers to other bankruptcy related questions please get in touch with an experienced southern California bankruptcy attorney at Westgate Law as soon as possible.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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