Rebuilding Your Finances and Credit Rating
While most people going into bankruptcy focus on getting back to normal, it is wise to give some consideration to life after bankruptcy.
It’s ironic, but creditors can look favorably on people who file bankruptcy. By filing bankruptcy, you are telling creditors that you are serious about dealing with your financial problems. Provided that you maintain good spending habits and exercise judgment, you will begin to see positive effects not long after the final discharge of your debts (in Chapter 7) or the approval of your repayment plan (in Chapter 13). Every case is unique, however, and you should speak with a lawyer to discuss your situation.
Your Life After Chapter 7
People filing Chapter 7 bankruptcy tend to recover their credit more quickly than those in Chapter 13. After Chapter 7, most people will be able to buy a car on credit very soon after their bankruptcy petitions are approved, if not immediately. Getting a mortgage, however, may be more difficult. Though your bankruptcy will appear on your credit record for 10 years, you will start receiving credit card offers soon after the final discharge of your debts. If you use these cautiously, you will find more credit opportunities opening up for you.
Your Life After Chapter 13
A Chapter 13 bankruptcy will stay on your credit record for seven years. Making consistent payments tells lenders that you are a good credit risk, and you will receive credit card offers soon after the approval of your repayment plan. Your credit rating will begin to improve almost immediately, as you continue to make payments in your repayment plan. You may even be able to buy a house while you are in Chapter 13. In some ways though, a Chapter 13 repayment plan is more restrictive than Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you must get permission from the bankruptcy court to purchase a car, house or other item on credit.