Rebuilding Credit After Bankruptcy
Once you have filed for bankruptcy, you have the opportunity to start fresh and to rebuild your credit. It is important to consider the factors that led to your unmanageable debt and to learn from mistakes and missteps before obtaining new lines of credit.
At the Peoria law office of Charles E. Covey, Attorney at Law, we understand the challenges you face as you begin rebuilding credit after bankruptcy. We know the potential pitfalls that often appear and we know which opportunities are beneficial. Contact us to discuss your financial situation and strategy after bankruptcy .
Bankruptcy does impact your credit, regardless of the myths you may have heard. However, it is likely that your credit was damaged before you filed. If you missed payments, faced foreclosure or suffered repossession, your credit score had already dropped prior to your fresh start through bankruptcy.
Rebuilding Credit One Step at a Time
Though your credit report will reflect your bankruptcy for up to seven years for Chapter 13 and up to 10 years for Chapter 7 , there are steps you can take to start rebuilding your credit.
- The first step in rebuilding credit after bankruptcy is to live on a budget. Take the opportunity to establish a workable budget that includes putting aside savings and paying your bills on time. This demonstrates to creditors that you are proactive in managing your finances and have become a good credit risk.
- Next, you must demonstrate to creditors that you can handle credit responsibly. Though you will likely begin receiving credit card offers shortly after filing for bankruptcy, the terms may not be favorable to you. After a short period of time, you will find the terms listed in the offers will reflect lower interest rates and higher credit limits than they did immediately following your bankruptcy. Limit the use of you credit to only what you can afford, use your credit cautiously and make timely payments.
After about two years, many people find that they qualify for home loans with reasonable terms. If you are considering the purchase of a home, remember that a mortgage lender will consider factors such as stable income and timely payments to creditors. If you have demonstrated that you are creditworthy by following the first two steps in rebuilding your credit, it is likely that a home loan will be made available to you.
Though rebuilding credit after bankruptcy is important, effectively managing credit in the future is just as important. Through credit counseling , we can help you create a successful plan to rebuild your financial life. Contact Charles E. Covey to schedule a consultation .
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
