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Can I still obtain Credit During a Bankruptcy?

Feb 24, 2020 | Blogs

Obtaining a loan while you are still within the limitations of bankruptcy case can be difficult. But it is still possible. To make it possible, though, you need to get approval from the court. You must consult our experienced lawyer Dalyla Santos and we can explain your situation so you can better understand how you can obtain credit during a Bankruptcy.

Rebuilding Credit After a Chapter 7 Bankruptcy

A concern which often comes up when considering Chapter 7 bankruptcy is that it will affect one’s credit negatively and make it difficult to rebuild credit. If you are considering bankruptcy because you are behind on your credit card or medical bills, chances are your credit report has already been negatively impacted. While filing bankruptcy does affect your credit, it does not hinder you from rebuilding your credit in the future. Although a bankruptcy usually gets reported on your credit for up to ten years, it certainly does not mean that you cannot get new credit for ten years. Most people who file for Chapter 7 bankruptcy begin to receive credit card offers shortly after their case is closed. Over time, the terms offered are more favorable, and credit limits are often increased with responsible use of credit cards. Because Chapter 7 bankruptcy wipes out most of your unsecured debt, it allows for a favorable debt to income ratio. With strategic and responsible use of credit, you will be able to slowly rebuild your credit score. It is not uncommon for those who have had a Chapter 7 filing to be able to purchase a vehicle or even a home a few years after the closure of their case.

What is Strategic and Responsible use of Credit after Bankruptcy? 

#1 Review your Credit Report–Once your bankruptcy is complete your credit report should be updated and any negative remarks should be removed, and collections accounts should be closed. Creditors can be a little slow to update this information so it is critical that you review your credit report 90 days after your discharge and correct any errors you may find. If you find mistakes in your report or if you are still receiving collections calls, then you need to take action. Please do not hesitate The Santos Law Offices, PA for help

#2 Obtain a Secured Credit Card– You will have to start using your credit again to rebuild it but this time you must do it correctly. There are credit card companies that will take a small deposit and extend you a small amount of credit so that you can begin establishing a credit history once again. The key here is charging very little every month and paying off the credit card in full at the end of each month, even making two payments a month.

#3 Stick to your credit cards for a long time–Part of your credit score is dependent on how reliable you are over a long period of time. Sticking with the same credit cards, home and employer over many years helps to demonstrate that you are steady, and lenders are more likely to extend you credit in the future.

Following these basic steps will put you on the right path towards establishing excellent credit so that you can once again take out a car or mortgage loan.

If you have additional questions about your credit score or your credit report, please contact us at The Santos Law Offices, PA for more information. Call 866-661-3816 for a free consultation.

*The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice.

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