Bankruptcy Alphabet: F is for Fresh Start

Bankruptcy Lawyer


The purpose of the Bankruptcy Law (Bankruptcy Code in legal language) when it was first created was to give the “honest but unfortunate” debtor (that’s a person who owes another person or company money) a “fresh start”.  So, if you run into financial problems, and are honest about it, and tell your attorney, the bankruptcy trustee, and the court everything about your finances, you can get a “fresh start”.  What exactly does that term mean and why is it so important?

Fresh start” means that once your bankruptcy case is over, you can start over with your credit, debts, and credit history.   Almost everyone has wanted a fresh start at some point in their life.  The best example is when you are a school-age kid, and you are moving from grade school to middle-school, or from middle-school to high school.  Maybe you were tired of the obnoxious people, your so-called friends, and wanted to move on to a new school, with more new kids to meet.  Or, to change jobs to get a fresh start in the work world, possibly.  Why does the fresh start help so much?  Because the new people you meet at the new school or new job don’t have any preconceived notions about you.  You got rid of your old “baggage” from the old people.  Same thing goes for your creditors after bankruptcy.  You get rid of the old “baggage” (debt), and the creditors treat you like a new person.  The only thing that shows up on your credit report is the bankruptcy. 

Why is this “fresh start” so important?  The rest of your bad credit history can’t be used against you.   The old creditors can’t ever again collect from you on “unsecured” debt like credit card and medical debt.  So, now you are a person with “fresh” credit.  You are free to start building up your credit again, slowly, so that you can show you can handle debt.  Many creditors look to give credit to people within a  year after bankruptcy because they don’t have much other debt, and are more likely now to be able to pay it back.  People can apply for car loans shortly after bankruptcy, and, for home loans a few years after bankruptcy.  One reason creditors are now willing to give new credit is because a person who files Chapter 7 (full, debt elimination type) Bankruptcy, can’t file another Chapter 7 case for 8 years.  So, now, the person with the “fresh start” cannot totally eliminate unsecured debts for a long time.  That makes a person who filed bankruptcy a more attractive credit risk than someone with a lot of outstanding debt.

The F in the Bankruptcy, “fresh start”, is an important part of the Bankruptcy Code that helps people start over with their creditors giving them a clean slate for their credit. Then, people get the chance to rebuild their lives, without the burden of crippling debt.

If you are interested in getting a Fresh start in Northern Illinois or Southern Wisconsin, call us:

Daniel J. Winter


53 W. Jackson Boulevard—Suite 725

Chicago, IL 60604