Getting a Credit after Filing a Bankruptcy

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Getting a Credit after Filing a Bankruptcy

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People, filing for bankruptcy, are always concerned about whether they will and when they will be able to utilize their credit again. To be able to use the credit again depends on each person’s situation. However, one undisputed determining factor for it is the amount of time that has passed.

After Filing for Chapter 7 Bankruptcy

Getting credit after a Chapter 7 bankruptcy is difficult, but not impossible. People with poor credit or no credit will find it difficult to get credit with favorable terms, as they will be asked to pay more to be able to borrow money. This means the rates of interest and annual fees will increase for them. However, after Chapter 7 bankruptcy, your debt to income ratio will considerably decrease and you won’t be eligible to file for Chapter 7 bankruptcy again for the next 8 years. Both of these factors will help you in becoming a more likable borrower for your creditors.

After Filing for Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you won’t have to wait for 3 to 5 years to try to use your credit, despite it lasting for around 3 to 5 years. Although there will be a decrease in the debt to income ratio of Chapter 13 filers, it won’t be as fast as it is in Chapter 7 bankruptcy. In most of the instances, the rest of the Chapter 13 bankruptcy can be financed by the filers, after around 18 months. Having equity in your home is one such instance where this is particularly possible.

Few Things to be Consider

It is always better for you to take time and improve your financial future than to immediately jump at the offer of borrowing money from a willing lender. You should save money and rebuild your credit score to get credit with more favorable terms. One of the best ways to improve your credit score is to get a credit card, which is an unsecured debt, and to keep up with the repayment of the balance every month. As soon as your credit score reaches around 620, you can start looking for the best loan terms and rates.

Your credit score, before the filing of bankruptcy, will largely determine the time duration taken to get back to a good credit score rating. The after-effects of bankruptcy on your credit score will depend on your previous low credit score and the time passed since you received a bankruptcy discharge. In Chapter 7 bankruptcy, your credit rating is affected for about 10 years and in Chapter 13, it is affected for about 7 years.

If you are finding it hard to cope with the pressure of your debts and are deciding to file for bankruptcy, contact The Recovery Law Group, the best bankruptcy attorneys in Los Angeles & Dallas, TX, at Recovery Law Group and 888-297-6203. Bankruptcy is a hard decision to make and the guidance of experienced bankruptcy lawyers will help you in getting through this complex process. Bankruptcy is not only about your today but also about your yesterday and tomorrow.