These are questions I hear from many potential clients. Many people that need to file bankruptcy choose not to because they fear the ramifications. Surprisingly, in many situations, your financial situation improves quickly after bankruptcy. It may take longer for others, but it is not a credit death sentence. So, the answer is yes, there is life after bankruptcy.
Will I ever have credit again? Yes, and probably faster than you think and faster than if you struggle for 10 years paying your creditors two to three times what you owe.
How long is bankruptcy reported on a person's credit report?
- Ch 13 = 7 years from date case is filed – you will be in a repayment plan for 3 to 5 years during which your credit will improve some- the debts will be reported as in a wage earner plan or in chapter 13- you do not get a discharge until the end of the plan- so it is harder to rebuild your credit during this process. If you are paying a secured creditor directly, like a mortgage or car loan, those payments will be reported as positive credit.
- Ch 7= 10 years from date you file the case. Even though this is a longer period than chapter 13, you can start to rebuild faster because the case is over faster. You get your discharge around 90 or so days after you file the case. You can begin rebuilding your credit at that time.
When will I be able to get a home mortgage?
- If you already have a home loan and you continue to pay your mortgage after bankruptcy- those payments will help rebuild your credit. You would be eligible to refinance or sell and obtain new home financing 2 to 3 years after receipt of discharge.
- If you do not have a home loan or if you have to surrender the current home you have, if you do some things to rebuild your credit then you should also be able to obtain a home loan, 2 to 3 years after receipt of discharge.
- It is also 2 to 3 years after a foreclosure judgment. This is important to remember because many times the foreclosure comes after the bankruptcy. Anything you can do to speed up the conclusion of a foreclosure will get the time ticking faster. You could also ask for alternatives, like a deed in lieu of foreclosure or a consent judgment.
What about a car loan? A car loan is the easiest and fastest way to rebuild your credit after bankruptcy. You will pay a higher interest rate, but you will be able to obtain a vehicle loan. There are companies that specifically cater to people seeking that fresh start after bankruptcy. You will receive solicitations from lenders offering you car loans. Shop around, but do not let too many lenders pull your credit.
Will I be able to Rent a home? This is probably the most worrisome for people that are filing bankruptcy. I have filed thousands of bankruptcy cases and I have received only a handful of calls from people that were having a hard time renting after bankruptcy, which tells me most people do not have a problem. If you have a problem at one place, try another- which may not be so easy in today's competitive rental market. Hopefully this will not last. Get a reference letter from a current or prior landlord to submit with your rental application. If you can, offering a few extra months of rent in advance can prevent a denial.
Will the bankruptcy prevent me from getting a Job? Some potential employers do check credit and a bankruptcy can affect your ability to obtain certain types of jobs. Be upfront and advise the potential employer that you had to file bankruptcy. Bankruptcy will not prevent you from obtaining most jobs. The types of jobs that could be affected are ones that require security clearance and fiduciary control of other people's money.
Will I be able to get a Credit card after bankruptcy? After you receive a bankruptcy discharge you will begin to receive credit card offers in the mail. You should expect higher interest rates, but look out for fees- annual fees- set up fees- etc. While the interest is higher to start with, it may be lower than what your old credit cards raised your interest rate to, when they saw signs of trouble. Be responsible with the usage and it will help reestablish your credit.
What about my credit score? Check your credit report about 60 to 90 days after your discharge (annualcreditreport.com). Make sure things are reported as discharged that should be and if you kept a home or auto loan, make sure you are getting positive reporting for the payments you are making. If things are not being reported correctly, you need to dispute it. If you are unable to get the incorrect reporting fixed, contact an attorney, at Holland Law Group to see if you can file a claim under the Fair Credit Reporting Act.
At Holland Law Group we offer our clients a free membership to 720 credit score program. This is a program that guides you through steps you should take to rebuild your credit the right way. Be careful as there are so called credit repair companies out there that you pay, and they just send all these letters out trying to dispute even valid debts. This does not work, the credit bureaus have caught on to this game and once they see this is what is going on, they may flag your report and then if you truly have an incorrect reporting, you may have problems getting it fixed. Think of it as the boy that cried wolf. We are not affiliated with 720 Credit Score, but we feel it is a valuable tool for our clients to make the most of their fresh start.
If you have a concern about how bankruptcy will affect you after filing, ask your bankruptcy attorney. Sometimes a little planning (when possible) can help circumvent potential problems. We will not know though if you do not bring it to the attention of your attorney. Do some research on your own- but confirm what you find out with your attorney first. There is a lot of wrong information out there and every case is different. If you meet with an attorney and they do not care to address your concerns for important matters after bankruptcy, you may want to consult with a different attorney. There is nothing wrong with consulting with a few different attorneys to find one you feel comfortable with and who has the knowledge and experience to help you get the best result for your situation. Our attorneys at Holland Law Group serve the Treasure Coast to the Gold Coast. Call today for your free Bankruptcy Consult with one of our knowledgeable attorneys.