Credit After Bankruptcy & Bankruptcy Credit Cards

What if I had to file for Bankruptcy?

There are a couple of ways a person may have filed for bankruptcy, Chapter 13 and Chapter 7. It seems that lenders are usually more partial towards those who file Chapter 13, obviously because they chose to pay a chunk of the debt back as opposed to filing a Chapter 7 where nothing is repaid. Both situations will, unfortunately, affect a person’s credit and will remain on their credit report for 10 years.

If an individual has just filed a Chapter 13 bankruptcy, it will no doubt be extremely difficult to get, say, a mortgage loan at the moment. However, there are ways that person can, indeed, start to rebuild their credit score. One of the most effective ways is simply by opening another line of credit. This type of credit, however, is referred to as a “secured” line of credit where the borrower’s balance is equal to that of what they deposit into the account. With a secured line of credit that has a “guarantee” of payment based on the deposit amount, an individual with a lower credit score and no other lines of credit can get a fresh start.

After two years of filing for bankruptcy, the individual who had filed for bankruptcy will, in most cases, be able to apply for another loan such as a mortgage. This time around, however, the terms may be quite different. The lender will also most likely have to see what has been improved and how likely that another bankruptcy could possibly occur again after 6 years as an individual can legally file for Chapter 7 bankruptcy once in every eight years, or another Chapter 13 after two years of discharge. In many cases, the down payment required can be much higher than it would have been if a bankruptcy had not been filed years prior to the new loan.

Ultimately, after a bankruptcy being present on a credit report, getting financial backing will be much more difficult than it ever has been before for many people. And if it is at all possible to avoid filing for bankruptcy, such as through that of a debt settlement or speaking with a legit credit consolidation professional, it will save that individual a lot of strain when it comes time to apply for another line of credit later on.