How Will Bankruptcy Affect My Credit After I File?

There are many myths surrounding how bankruptcy’s effect on credit will be. Most individuals are highly concerned about the affect bankruptcy will have on their credit after they file for bankruptcy protection. At the Larkin Law Firm, our first priority is to eliminate your debts so you can begin rebuilding your financial life. This also includes your credit!

Start Rebuilding Your Credit ASAP!

In many situations, individuals don’t realize the critical importance in restoring your credit after a bankruptcy filing. While we understand a debtor’s reluctance to obtain and use credit after filing for bankruptcy protection; re-establishing good credit is an important part of restoring financial order to your life. Obtaining future credit can help you to start to rebuild so when the time is right you are in a position to secure financing.

People often ask questions such as “how long will it take me to buy a car or home?” or “when can I get a credit card again?” The answers to these questions depend on how persistent you are in rebuilding your credit. If you obtain credit and manage your finances in a reliable, consistent, timely manner (and within your budget!) after the bankruptcy, your credit report and score will improve over time and lenders will be more inclined to extend you credit.

While bankruptcy’s effect on credit will be evident for some time – it does not last forever and it might be your best option in rebuilding your financial future.

Tips For Restoring Your Credit After Bankruptcy

Check your Credit Score:
At The Larkin Law Firm, we recommend pulling your credit 60 days after your bankruptcy discharge to make sure all creditors are properly reporting your bankruptcy filing. All accounts discharge in bankruptcy and should reflect a zero balance along with a notation that the account has been discharged in bankruptcy. You should dispute any improper reporting.

Apply for New Credit that is within your Budget:
Once all accounts are properly reporting, you should apply for new credit, and use it only for small purchases such as food and gas. These are expenses that you will have regardless of your financial situation. If you charge food and gas and pay off the balance in full each month, your credit report will reflect these timely payments and will help to restore you to good credit.

Try To Avoid the #1 POST BANKRUPTCY PITFALL – Living Beyond Your Budget!

A debtor will never be able to get ahead if his or her monthly expenses are more than what their monthly income is. If you don’t live within your means, it is likely you will end up in the same situation down the road.

REMEMBER — Budget, Budget, Budget!

MYTHS Regarding Filing For Bankruptcy

1. I’m a failure if I file for bankruptcy. Definitely not!

A fundamental consideration of congress when enacting the Bankruptcy Code was for the purpose of encouraging businesses and consumers to take risks. Many successful entrepreneurs or businesses have filed for bankruptcy protection at some point in time, and many risk takers would not take those risks without knowing they have a way out. Bankruptcy is not an act of failure, rather it is a carefully thought out business decision that must be made in order to recover and restore your future, and the future of your family.

2. Everyone will know I’ve filed for bankruptcy protection. Not True.

While a bankruptcy filing is public information, it is not publicized meaning it is not something published in the newspaper or otherwise. Bankruptcy information is only available to those who take the time to go to the bankruptcy court and search the court record for the information. This information can also be obtained by registering and paying an access to PACER.

3. Filing for bankruptcy is complicated and takes a very long time. Not as much time as you think!

The Chapter 7 bankruptcy filing process typically can be completed in a period of 90-100 days. There is usually only one hearing to attend and it’s not even at a courthouse. The process is for the most part very informal. It does not require a jury, and more often than not, your appearance before a bankruptcy judge is not even required.

If you would like to learn more about bankruptcy’s effect on credit and if bankruptcy is the right choice for you then contact the Larkin Law Firm today!