When you file for Chapter 7 bankruptcy, you are able to have a new financial start. Not only have all of your dischargeable debts have been eliminated; your creditors are no longer contacting you. However, after a bankruptcy discharge, you must find a way to work with your damaged credit and also look for ways to rebuild credit after bankruptcy.
Although it is not entirely impossible, it can be challenging to try to begin the process of rebuilding your credit after you have declared bankruptcy. This process can be even more difficult for individuals who file after an economic downturn. Many times banks and other lenders are hesitant to lend money to anyone who does not have excellent credit. Fortunately, there are steps you can take to rebuild credit after bankruptcy and get your financial life on the right track.
How Bankruptcy Affects Your Credit
When you filed for bankruptcy chances are your credit score was not the greatest. There were probably late payments, delinquent loans and other items that caused your credit score to be low. Medical bills, credit card bills and other debt may have become too difficult for you to manage. This means that having a bankruptcy on your credit report will not lower your credit score a lot. However, it does mean that the bankruptcy can remain on your credit report for ten years. Even after years of making timely payments, you may still be turned down for loans.
The good news is that some lenders are willing to extend credit to individuals a year or two after a bankruptcy discharge.
Pay Remaining Bills on Time
To begin the process of rebuilding your credit, you must pay off the remaining bills you have on time. Some debts such as student loans and child support payments are not discharged in bankruptcy. But, student loans are included on your credit report. Any other loans that you have should also be paid off as quickly as possible.
You should also request a copy of your credit report. Check the report to ensure there are not any mistakes on your file. Also make sure that bills that are paid on time are correctly reported.
When you want to rebuild credit after bankruptcy, do not apply to many lenders at one time. This can bring down your credit score. You should also be wary of loans with high interest rates.
Do you want to know how you can rebuild your credit after bankruptcy? Contact Douglas Jacobson Law Firm for a free consultation.