Credit Cards

Credit After Bankruptcy

Many people who file for Chapter 7 or Chapter 13 Bankruptcy protection have an understandable aversion to credit when it's over. Most don't ever want a credit card again.  It might seem that if you stick to cash, you "can't get into trouble again", and in a sense that's a very reasonable position. Your Bankruptcy Attorney can give you additional options as to how to repair and rebuild your credit following a Bankruptcy.

Once you have given yourself a Fresh Start through bankruptcy, you definitely don't want to risk late payments and climbing credit card balances for a number of reasons. The combination of bankruptcy and new delinquent items on your credit report will take a severe toll on your credit score. Additionally, you won't have the safety net of being able to discharge debts in bankruptcy again for quite some time. Remeber, your options are more limited if you do get into a financial bind.

You Need a Credit History to Get Credit

If you're planning to go a couple of years without credit after filing a bankruptcy, you may be in for a surprise when you try to finance a home or a car. The problem is, there won't be any record of your newly stable finances after your bankruptcy filing. If you want a loan from a reputable mortgage or auto finance company, the lender will want to see that you've demonstrated good financial management (made scheduled payments) since your bankruptcy.

The Finance Company will look to your credit report, and if you haven't used credit or credit cards since your bankruptcy, they won't see anything there except the bankruptcy! You might feel that you've proven yourself by living successfully on cash for two or three years, but by your lenders' standards those two or three years won't exist at all. Your credit score won't reflect anything except your bankruptcy.  It is important to rebuild your credit and have credit cards that report to the major credit bureaus. 

Your Bankruptcy Attorney can point you in the right direction in order to improve your credit score and make yourself a good candidate for a mortgage or car loan at a reasonable interest rate, you'll want to begin rebuilding your credit immediately after your bankruptcy.  The sooner you can re-establish credit, the quicker that your credit score will begin to climb.