After Filing for Bankruptcy, Is Credit in Your Near Future?

Can you get credit after you file for bankruptcy?  Filing for bankruptcy will make it more difficult to get credit, because the bankruptcy filing will remain on your credit report for up to 10 years, but it will not make it impossible.

Most people who file for bankruptcy protection do not have a good credit rating. They may have failed to pay their bills, they may be facing foreclosure, their utilities may have been shut-off, and their property may have been repossessed. Many have been evicted and have had their wages garnished.  

Every one of these actions has been reported to the credit bureaus, especially if they have gone to a collection agency. Collection departments and agencies know how to use credit reports to squeeze debtors, and they do it well. Most debtors have been able to get credit during this time, but they have paid exorbitant interest rates.

How fast will you be able to get credit after filing for bankruptcy? The answer to this question depends on what type of bankruptcy you file. Most individuals file either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy, commonly called a “liquidation bankruptcy”, is the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships.

A Chapter 13 bankruptcy is the second bankruptcy available to individuals and is called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. When you file a Chapter 13 bankruptcy, you can continue to borrow money during your case, but most loans you will obtain will come with higher interest rates.

When filing a Chapter 7 bankruptcy, debtors are frequently flooded with offers for credit loans after their bankruptcy has been discharged. Although the offers come with high interest rates, the credit is available. The creditors know that a Chapter 7 bankruptcy discharge means the debtor cannot file for bankruptcy protection again for up to eight years, and eight years is a long time to be hounded by bill collectors.

Bankruptcy occurs for a variety of reasons including: divorce, catastrophic events, foreclosure on personal or business property, failure to pay bills on time, loss of income, health problems, poor business decisions, bad timing, bad advice, and a poor economy. Bankruptcy happens, and it can happen to anyone.

Creditors understand a bankruptcy filer is doing something about their poor financial condition. Many creditors look at filing for bankruptcy protection as a responsible move, allowing debtors to start over. Some creditors may be willing to issue new credit at a higher interest rate. Higher interest rates let creditors protect themselves from the increased risks of lending.

So, will you get any credit in the near future after filing for bankruptcy protection? Yes, but you might want to create a budget and learn how to live within your means.

Is bankruptcy right for you? Talk to a bankruptcy lawyer. If you live in or around the metropolitan area of Springfield, Massachusetts, contact us here today at . We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.

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