Credit After Bankruptcy – What Can You Expect?
Declaring personal bankruptcy is a debtor’s final recourse when he realizes the impossibility of being able to pay back his creditors. Creditors and debt collectors have to make do with recouping as much as they can of their investments from the liquidated value of the debtor’s assets. This being so, lenders are understandably reluctant to open up new credit lines to individuals that have a past record of bankruptcy. It takes about ten years before the information on bankruptcy filing can finally be erased from a person’s record.
Paradoxically, the only way for you to rebuild your credit reputation after a bankruptcy is to apply for a new line of credit. If unsecured credit lines are hard to come by, opt to apply for secured credit. This type of credit poses no risk for the lender and is ideal for people interested in rebuilding a positive credit background. Repairing your credit history entails garnering proof that you have acquired a more responsible borrowing behavior. Lenders give positive feedback to credit bureaus on consumers’ timely payments. You would also get a positive feedback if you resist using up your entire credit limit as this demonstrates your ability to control your spending habit.
Do not think that a bankruptcy record will make it totally impossible for you to get approved for future loans. The truth is, between you and a person with bad credit, you might actually have a better chance of getting a loan despite your bankruptcy record. The reason behind this is people with bad credit are at risk of filing for bankruptcy in the near future, whereas, someone who recently filed for bankruptcy cannot file for another bankruptcy within a number of years depending on the type of bankruptcy filed. For example, if you filed for a Chapter 7 bankruptcy, it would take 8 years before you can file for another Chapter 7 bankruptcy. Or, say you filed for a Chapter 13 bankruptcy, you would only be allowed to file for a Chapter 7 bankruptcy after six years.
Try not to get victimized by lenders who might take advantage of your situation and charge exorbitant rates. Research and compare lenders’ reputation and interest rate offerings. The last thing you want is to commit to a lender who might just put you on the brink of another bankruptcy.
