The most common concern when filing for bankruptcy is facing the consequences of filing. Many are concerned about the credit impact in the future. A bankruptcy is recorded on your credit report and will remain on your credit report for 10 years unless you are able to manipulate the credit bureaus to remove the bankruptcy. In the past, we have seen from our previous clients that your credit score will be impacted, BUT you will receive credit offers immediately after your bankruptcy is discharged. So, why is it that your bankruptcy does not stop the banks from extending credit to you? We will explore post-bankruptcy impact in this article. We have written about this in past, but there are some updates to this issue today as credit profiles and the way credit profiles are read and evaluated changes over time.
A bankruptcy is designed to have some impact on your credit record in the future, but this past recession has really changed how your credit score and marks on your credit are affecting your ability to get credit extended. We can confidently say that a bankruptcy is not the end of your credit history. It does not take 10 years to recover. In fact, you will get credit extended immediately after the bankruptcy. Banks are very familiar with bankruptcy rules. They know that when a Chapter 7 is filed, another Chapter 7 bankruptcy cannot be filed for another 8 years from the filing date of the last Chapter 7. So, they have 8 years to allow you to run up some debt and collect on it if they need to. The extension of credit will come via credit card offers with high interest rates at first. You will receive multiple offers for credit cards with high interest rates immediately after your bankruptcy is discharged. At this point in time, you are the perfect potential client for a credit card company because you cannot file for bankruptcy for another 8 years and it is not likely that you will want to be in the same credit situation that you were in the recent past. The bank will assume all of this and offer you new credit. Although the interest rates will be high at first, you should apply for these cards and have them handy for emergencies. You can also use the cards and pay them off on a monthly basis so that you can start building your credit record back up.
What about getting lines of credit for important stuff like cars and homes? Bankruptcy Law Professionals has researched many auto dealers who are now allowing financing to people with bankruptcies on their credit record. We have even been solicited to send our clients to certain dealers who accept bankruptcy in credit backgrounds. In the past, we usually set an expectation to be able to wait at least 2 years before you can buy a car after bankruptcy, but recently, we are finding auto dealers to be more and more flexible. Our real estate resources have all informed us that the normal lending guideline for bankruptcy is to allow mortgage lending, 3 years after the bankruptcy. This means that you have 3 years to save a down payment and buy a house.
If you have any questions about the impact of bankruptcy after it is over, please contact Bankruptcy Law Professionals at (855) 257-7671 to ask any questions or to make an appointment with one of our Orange County bankruptcy attorneys or Riverside bankruptcy attorneys. We look forward to hearing from you.