Obtaining Credit After Bankruptcy

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After you file bankruptcy, obtaining credit for a loan or a credit card depends on exactly what you are looking for. For example, after filing bankruptcy, many clients have been able to rebuild their credit to the point where they could purchase real property, such as a household, or another asset on credit that they would not otherwise have the money to pay for. If, while wisely managing your finances, you plan carefully and pay your bills (including utility bills) on time, so could you!

Most clients who file bankruptcy are bombarded with auto loan solicitations with affordable interest rates after the bankruptcy is filed. You will not need collateral to get an auto loan. This holds true regardless of how high or low a wage you may earn from your employment, or the amount of income you may generate from your businesses. Furthermore, this applies to those who file chapter 7 as well as 13.

No matter how much debt may have been discharged, clients are quickly bombarded with credit card solicitations from many a prospective creditor. It makes no difference whether the former debt of the recently discharged was unsecured debt or secured debt.

Do not worry; these solicitations are legitimate, not fraudulent. Prospective creditors and lenders know that people are eager to rebuild their credit, and they know that the debtors cannot plan to file bankruptcy in court again for many years. For instance, if you file chapter 7, you need to wait another 8 years before another chapter 7 can be filed. Please remember that whether you file chapter 7 or 13, student loans, taxes, and debt stemming from past-due alimony or child support payments cannot be discharged. You may or may not get to keep your tax return for that year. However, most debt that is unsecured can be discharged, including debt that is attempting to be collected from you in a debt collection lawsuit before you file. Remember, regardless of your jurisdiction, such lawsuits come to an immediate halt upon filing as part of the legal process. This is called an automatic stay, and you do not need to motion for any separate or special court orders or default judgment for this to happen.

While obtaining credit after filing bankruptcy may seem daunting, we are here to support you and help clarify matters throughout the process, from the initial building of your petition, to your filing date, to your meeting with the bankruptcy trustee, and beyond. Surely, you can become a customer at your favorite store again, able to buy many products on credit in no time. As a counselor, I am happy to be at your service, and to make sure that you learn everything that you need know.

Can You Obtain a Credit Card?

Most people will be able to obtain a credit card soon after the bankruptcy is over. In fact, we encourage clients to obtain one credit card after they receive their discharge. There is good reason to do so even if one’s credit report indicated a poor credit history before filing. Using the credit card wisely is a great tool and quick way to rebuild your credit score. A wise use of your credit card would be to make small purchases, such as an article of clothing, used furniture, or a few books, and pay it off quickly. You should always pay your balance off on time and be sure to notice how much money you have in your bank accounts, as awareness of your account balance is always important. Do not be delinquent with your payments. There is no need to consult a financial advisor, but every individual should budget wisely; as your personal budget is of great importance. Doing so will help you avoid repeating the credit problems of your past, and give you and your family a brighter financial future. Purchasing products on credit is often a good investment. However, you should still shop wisely. You do not want to exchange the health of your credit score for things that you do not really need and cannot afford. When you compare those who use credit wisely to those who do not, the former will always have a better credit score than the latter. Soon after the debt relief that bankruptcy brings, you will be able to purchase many goods, perhaps even a high dollar luxury or two, on credit.

Having a poor credit score costs consumers a great deal, while a good credit score is a great financial friend to have. If you are interested in viewing your credit report, you can review it online at sites such as Experian or annualcreditreport.com.

Can You Buy a Car?

Most likely you will be able to get a car loan immediately. However, be careful and be serious about the deal you enter. Know the worth and value of the car before you buy it. Consider what sort of insurance rates you will be paying, and your ability to distribute all payments in a timely fashion. . For your own protection, it is in your best interest to consult a mechanic or automobile expert. Such a person could offer an honest evaluation of the car and its maintenance history. Make sure that individual is hearing all your concerns, as it would be a good thing to get his or her informed approval. While they usually claim to be honest brokers, some car finance companies cause great problems for people who are emerging from bankruptcy, and some car finance companies are attempting to gauge people. They are not all above blatant misrepresentation. Be aware of these risks, otherwise you may be entering a deal based on false pretenses. Thoroughly review the rates that they charge and the terms of any contracts they may ask you to sign. Any contract you sign will have been thoroughly reviewed by an editor on behalf of the car finance company before it is presented to you. It is always best to read every single page. They are businesses after all, not a nonprofit. In any case, shop around and see what kind of deals car dealerships are willing to make for you. Calling or emailing several dealerships to compare the deals that they offer is always a good idea. They will have contact information on their website. Do not let one sell you into a bad deal and cause you financial hardship. You do not want to end up having to return your car or lose it to repossession.

When Can You Qualify for a Mortgage?

How long it will take to qualify for a mortgage depends on you and the prospective mortgage company. It has nothing to do with which ever trustee was assigned to your case.

Many mortgage companies want a person to be 2 years post-bankruptcy before the mortgage company will permit a person to close on a house. Of course, after your bankruptcy is over, you must pay your bills in a timely fashion. You do not want to find yourself stuck within a revolving door of debt.

Other factors that affect your qualification include the size of your paycheck, your debt load, and the amount of your down payment, among other potential issues (depending on the mortgage company’s underwriting requirements). Regardless, on a regular basis, I have former clients who purchase households just 2 years after their bankruptcy is over. Even clients who have previously dealt with a foreclosure or forced liquidation of an asset have been able to do so. Soon, they are building equity in a new household and establishing financial security. As a side note, you may recall that there is a residential exemption regarding the equity one has in one’s home.

Again, we recommend applying for a credit card immediately after your bankruptcy case is over. In any circumstance, you need a credit card for emergency purposes and, if you pay it in a timely fashion, you can use it to jump-start your credit.
Of course, be careful about carrying a significant debt loan and please do not become delinquent on any payments.


Unsure of whether or not bankruptcy is right for you? Want to see if you are eligible for bankruptcy? I am ready to discuss all your options with you in a free case evaluation. Find trusted, dedicated advice today at John Steinkamp & Associates.

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