For people in debt, filing for bankruptcy is an efficient way to wipe the slate clean and start fresh.
You may lose a few assets, but that’s a small price to pay for the removal of any personal debts. However, one of the biggest concerns people often have about filing for bankruptcy is what sort of impact it can have on their credit score.
While it is true that filing for bankruptcy will remain on your record and cause your credit score to drop, this hit should only be temporary, and is only a major problem if you had great credit beforehand.
Nevertheless, filing for bankruptcy will negatively impact your credit score. But, contrary to what you might have heard, bankruptcy will not totally ruin your credit, and there are a few simple methods for rebuilding credit after bankruptcy.
If you are wondering how to fix your credit after bankruptcy, these tips can help you.
Even though you’ve filed for bankruptcy, you will likely still have accounts open which require regular payments. For example, student loans, child support, or alimony payments are not absolved by Chapter 7 bankruptcy.
Focusing on these existing payments and making sure you get everything in on time is perhaps the best step you can take toward credit rebuilding after bankruptcy.
There are two reasons why this is so important.
First, if you can establish (or re-establish) a history of on-time payments after bankruptcy, it will show future lenders that you can be trusted with a new line of credit.
Second, focusing on getting your existing payments in on time is a great way to practice personal responsibility with your finances. After you have filed for bankruptcy, you will have fewer personal debts to pay. This is a great time to practice discipline with your money, and that starts with being on time.
We’re not saying you should never change your job after filing for bankruptcy.
But stable employment is something that credit lenders will look at when deciding whether or not you can be trusted to pay back a loan. So if prospective lenders take a look at your employment history and see that you have bounced around from one job to another, they may deem you (and your employment status) untrustworthy.
So maintaining a stable source of income while rebuilding credit after bankruptcy is an important step when it comes to establishing trust with credit lenders.
It is also another way to practice financial responsibility, as it is easier to budget and make consistent, responsible payments when you have a familiar and reliable source of income from month to month.
While applying for new credit after bankruptcy can be harder than it was before, it is still possible.
You will want to be careful about borrowing money too quickly after bankruptcy, but applying for a new line of credit is another way that you can focus on making on-time payments, which helps rebuild credit faster.
If you need to take out a loan post-bankruptcy, you may also consider applying with a co-signer who has good credit. Applying for a new loan right away is less advisable than applying for new credit, but if you do need a loan after bankruptcy, a co-signer can help you get approved more easily.
As long as you can make your loan payments on time, this will help you get your credit score back up.
If you must file for bankruptcy, working with a lawyer who understands the law and your case will help you as you work through the case and get settled afterward.
An experienced lawyer can help you before, during, and after the process so that you not only get your financial security back but are set up for success as well.
Parker & DuFresne is one of Northeast Florida’s most trusted and experienced bankruptcy law firms. Contact us today for a free consultation.
It’s important to hire an experienced bankruptcy attorney as one of the steps to take when you’re facing bankruptcy, and you are worried about credit rebuilding after.
This is because there are many different types of bankruptcy. Only an experienced lawyer will know which one would work best for your specific situation.
It might seem like it makes sense to do this yourself. But most people don’t have the time or patience to understand all of the details involved in bankruptcy. That means they make mistakes by not choosing the right type, or by not filling out paperwork correctly. Both things could lead to delays and ultimately hurt your chances of getting any debt relief at all.
This is not a journey to take lightly, but it is also not one to take alone. If you need to file for bankruptcy, reach out to us today to start your journey with us.
If you want to learn more about the options you have and steps to take, call us for a free consultation.
Parker and DuFresne