Credit Repair After Bankruptcy
What You Need To Know

As a credit attorney, I've helped several clients with credit repair after bankruptcy. Bankruptcy is not something to be taken lightly. I counsel my clients to only consider it as a last resort. Many times it may be better to work with a debt settlement company or to seek the assistance of a credit counseling organization to work out a debt solution.

However, sometimes, uninsured medical expenses, unemployment, divorce, or other life changing circumstances can be so overwhelming that bankruptcy may be necessary to turn things around and get your life back. That's why credit repair after bankruptcy is so important.

You may have a lot of unanswered questions about credit repair after bankruptcy. So lets clear up a few misconceptions. Here's a list of questions I am sometimes asked by clients regarding bankruptcy and credit repair:

Will bankruptcy permanently ruin my credit?

Filing for bankruptcy will not permanently ruin your credit. After your debts are discharged, you can do credit repair after bankruptcy and re-establish your credit. Many people have eventually increased their credit scores greater than ever after filing bankruptcy.

Do I have to wait 10 years before I qualify for new credit?

Although bankruptcies can be reported by the credit bureaus for up to 10 years, generally you will not have to wait that long to qualify for new credit. Oftentimes, clients will get credit offers in the mail immediately after bankruptcy discharge. However, higher interest rates usually apply.

How can I avoid getting back into financial trouble after
bankruptcy?

This is really a great question. And I am always eager to answer it for clients. When considering credit repair after bankruptcy it's very important to assess what financial decisions led to your bankruptcy. You may then need to change how you manage your credit.

Basically, it will be important for you to create a budget and learn to spend less than you earn. I know it sounds simple, but it's fundamental to staying financially healthy. I recommend that you use a good budgeting tool to help monitor your spending.

After re-establishing credit,start the habit of only using credit for essentials and pay the balance off each month. For example, use your new credit to purchase gasoline or groceries and then pay the balance in full each month. The point is to develop new disciplines for managing your money and handling credit wisely.

Will bankruptcy keep me from getting a job?

Considering the new normal of credit scores, more and more employers now use credit scores to screen employment applicants. However, by law they have to obtain your written consent to review your credit.

Some employers consider filing bankruptcy to be a character issue and may elect to hire another equally qualified candidate. So if you are asked to give written authorization for a potential employer to review your credit, it may be wise to be pro-active and let them know you filed bankruptcy and explain your circumstances in advance.

Can I qualify for a car loan or mortgage loan after
filing bankruptcy?

I know clients that have financed another car within 2 weeks of bankruptcy discharge. There are some lenders that will grant new credit immediately after bankruptcy. However, the interest rates are significantly higher than normal and the price of the car may even be above market value. But you can obtain financing for the purchase of a vehicle after bankruptcy.

Bankruptcy will not keep you from eventually rebuilding your credit and qualifying for a new home. Many clients re-establish their credit and qualify for mortgage loans. Mortgage lending guidelines frequently change, so it's difficult to say how long it will take for you to qualify again. But you can improve your credit and increase your credit scores after bankruptcy and qualify to buy a home.