Tuesday, November 27, 2012

How to Get Credit After Filing for Bankruptcy

How to Get Credit After Filing for Bankruptcy
King and King Bankruptcy Attorneys 11/27/2012

During our bankruptcy consultations, one of the biggest worries our clients have is that they’ll never get credit again—or at least not for the 10 years during which bankruptcy shows on their credit report. Our clients are usually surprised to hear it won’t be as difficult as they fear. Bankruptcy will affect your credit score in the beginning, but you will be able to get credit again and rebuild your score. Bankruptcy actually helps your chances of getting credit if you had high credit card debt before the bankruptcy and collections or charge-offs. Bankruptcy gives you a clean slate. 

Secured credit cards:
 A credit union or a bank may give you a secured credit card. This is where you give the bank funds to “secure” the credit on the card. Some lenders might want you to deposit the full amount of the credit limit (e.g., a $500 deposit in exchange for a card with a $500 limit), whereas others might only require you to secure a certain percentage of the limit with a deposit (e.g., a $250 deposit in exchange for a card with a $500 limit).

Credit cards:
Many people get offers for credit cards right after bankruptcy. There are a number of companies that specialize in credit cards after bankruptcy because they can get higher interest rates or fees. Make sure you understand the terms of these offers and take the best one. 

Car loans:
Much like credit cards, there are auto lenders out there who will give you a car loan right after bankruptcy, usually at a higher interest rate. Another option is to get a co-signer for the loan. The lender may agree to refinance it later if you make regular on-time payments for a period of time.
After about six to twelve months of on-time payments toward new accounts, even small ones, your credit will start to improve. From there, getting more credit should get even easier. Some people who work diligently toward rebuilding credit can even buy a house within just a few years after bankruptcy. 

If you have questions about your credit after a bankruptcy, contact King and King at 404-524-6400 for a free consultation.