There is a common myth that your credit is paralyzed after filing for bankruptcy. This really is just a myth. In most cases people’s credit scores will actually go up after filing for bankruptcy. People who have been struggling with low credit scores and high interest rates have even seen their scores go up by over 100 plus points after a discharge. There is a reason for this: you will be cleared of your prior obligations making you a more desirable candidate in the future. At Seelinger Law we have the software to show you how your credit score would be affected from the bankruptcy even before you file. So, if you are curious about the benefits of bankruptcy but have not made a decision yet, come in for your FREE CONSULTATION and let Seelinger Law show you how your credit score would be affected.
You may have a high credit score as you may have been spending $400-$800 a month (basically another mortgage payment) toward your credit cards for a period of years only to survive paycheck to paycheck with no disposable income and no ability to start saving for retirement. Seelinger Law will also counsel you on maximizing your credit after the bankruptcy. Repairing your credit can be easy if you follow good credit principles after your debts are cleared. On time payments, and the practice of not over-extending yourself, can go a long way towards giving new creditors confidence in lending. If your credit score was high from making on time but exorbitant payments, your credit score may be lower after filing. However, credit can be rebuilt by following responsible credit practices. Seelinger Law clients do not have any problem getting vehicle loans or even credit cards after they file for bankruptcy. You may even be able to get a mortgage depending on your circumstances. Each bank has its own protocol for considering loan candidates and if you are a person with a stable job and family support, you may qualify for large item credit such as a home loan. The key to improving your credit is simply to use new credit responsibly so that the creditors can report positive activity each month. Plus, reaffirming your current secured debts will allow your creditors to continue to report positive activity even after your bankruptcy filing further helping your credit score.
The bankruptcy filing will generally remain on your credit report for 7 to 10 years, but you can begin rebuilding your credit immediately, and having your debt eliminated will make it much easier to dig yourself out of the hole that you are in.
You can think of it like this: your credit score is suffering under a large load of debt right now, and in order to improve the score, you need to make on time payments and your debt to income ratio needs to be lowered. So to make your credit score go up, you need to have less debt and a better record of paying off the debt. And right now, with too much debt, that scenario is nearly impossible to accomplish quickly. However, once your debts are discharged in a bankruptcy case, you no longer have the debt to work with, so all you have to do is make on-time payments on your old secured loans (if you choose to continue with them), and don’t overextend yourself with new debt. Rebuilding your credit after a bankruptcy can actually be much easier than repairing your credit without a bankruptcy.
There is nothing in bankruptcy law that requires a certain amount of time to pass before you can apply for credit. Each creditor operates under its own set of rules and regulations, so, hypothetically, you could be granted credit immediately after your discharge is ruled. In fact, some companies will be more willing to grant the credit because they know that you won’t be able to file bankruptcy again for a number of years.
Credit reporting agencies must follow the Fair Credit Reporting Act (FCRA). Under federal law you are entitled to a copy of your credit report every twelve months. There are many free sites out there such as annualcreditreport.com. At Seelinger Law our clients are given an extensive credit report history using specially licensed bankruptcy software.
There are three major credit reporting agencies, with their contact information listed below. You are also entitled to a report when you have been denied credit, as long as you contact the agencies within 60 days of your denial. Credit reporting agencies are monitored by the federal government and specifically the Federal Trade Commission. For more information you can go to www.ftc.gov/credit.
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Equifax Information Services, LLC
P.O. Box 740241
Atlanta, GA 30374
901 West Bond
Lincoln, NE 68521
A bankruptcy can be listed on your credit report from 7-10 years. However, this does not mean that you will not be able to get credit in the future. In fact, most of my clients find that their credit score actually increases after filing for bankruptcy and they become more attractive to potential credit establishments. The reason is that you will have less debts or obligations to pay back in the future. My clients have no trouble getting car loans or new credit cards after filing for bankruptcy.
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