Life After Bankruptcy and Repairing Your Credit
If you’ve recently declared bankruptcy or are thinking of doing so in the future, you’re probably wondering what your long-term future will look like after you’ve taken this crucial step. Contrary to what many people believe, bankruptcy will not ruin your financial life and can instead offer you a unique opportunity to rebuild your credit and get back on your feet. We’ve been working with clients just like you as they move through the bankruptcy process toward a brighter future, and we can help you, too. If you’re in Cathedral City, California, or anywhere around the Coachella Valley, call the Law Office of Robert L. Firth today for a free consultation.
How Long Does Bankruptcy Stay on Your Credit Report?
Generally, if you file for Chapter 7, it will stay on your credit report for 10 years. With Chapter 13 bankruptcy, if you complete the case, it will only stay for seven years on your credit report. During this time, creditors won’t be able to report on any debt that’s been discharged, and it will instead show up as a zero balance, but with a notation saying it was part of your bankruptcy filing.
Does That Mean I Can’t Do Anything Requiring Credit for Seven to Ten Years?
You can still find opportunities to purchase and borrow even after declaring bankruptcy. It’s possible to purchase a home one to two years after a Chapter 13 case, and it’s likely you can purchase a car even earlier, possibly within six months. If you file Chapter 7 bankruptcy, it’s possible to buy a car if your case has been discharged (which typically happens four months after filing), and you may be able to buy a house two to four years after your debt has been discharged.
What Steps Can I Take to Rebuild Credit?
It’s possible to rebuild your credit even through a bankruptcy, and there are several steps you can take to do this:
Implement a payment plan for all remaining debt that hasn’t been discharged and stick to it. This can be done even while the bankruptcy remains on your credit report. You must pay these debts on time every month with the goal of paying them off in full. This will do more to boost your credit score than opening new lines of credit.
Look over your credit report to check for errors and dispute any you find. Mistakes happen all the time, and clearing them can positively affect your credit score. For example, sometimes a name that is one letter off from yours can accidentally get associated with your credit history and will negatively affect your score as long as it shows up.
Don’t close old accounts unless you absolutely have to. Those accounts with a longer history will do more to increase your credit score than new accounts.
Use credit wisely and intentionally. If you’re only using a debit card to make purchases, it won’t do anything to increase your credit score, but a credit card will. However, you must make regular, on-time payments preferably above the minimum.
Consider opening a credit card if you don’t already have one. However, only do this if you’re sure you can use it responsibly.
Look into a “credit builder loan” available through some credit unions and banks. These aren’t typical loans, but are instead intended to help you rebuild your credit by making small, regular payments on a loan amount that’s been placed in a savings account for you.
How the Law Office of Robert L. Firth Can Help
We know bankruptcy law backward and forward, and have seen enough cases to advise you on your best options to come out stronger on the other side. We’re committed to open and honest communication and will never tell you something just to make you feel better. Call our office in Cathedral City, California, to speak with an experienced bankruptcy attorney and start making a plan today.