Even before you go through the process for a bankruptcy, one important thing that you should learn about is exactly how you can build your credit back up after your bankruptcy takes place. Basically, a bankruptcy should end up being your last resort when it comes to your finances. The process of a bankruptcy is fairly simple, although it can take quite a toll on your emotionally. Knowing that there are possibilities to bring your credit back up after the bankruptcy can give you a little bit of comfort while you are going through the filing process.
When you begin the bankruptcy process, you will need to give your lawyer or the courts all of the information that has to do with every bit of your finances. This will include any debts that you have with credit card companies, your regular income, property that you own and so on. Usually after you file, the courts or your lawyer will then send out a notice that will tell all of your current creditors that you have filed. This should prevent you from any calls regarding collections.
Individuals will normally file either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. The end result is the same but how the case is handled is a little different. A Chapter 7 bankruptcy is where the courts clear the individual of all debts and there is no repayment of debt. The reporting of this item will stay on your credit report for ten years. A Chapter 13 also forgives debts, but there is a restructured payment plan that lasts three to five years and at the end of that time a judge will sign an order forgiving the rest of the debt owed. This level of bankruptcy will stay on your credit report for seven years. Because Chapter 13 is considered a more creditor friendly bankruptcy, it is a little easier to establish credit after filing this form of bankruptcy.
After your bankruptcy has gone through, you should know that it will stay on your credit report for anywhere between seven and ten years. In most cases, it can take you between a year or three years to begin building your credit back up again. Credit after bankruptcy is obviously possible, it just takes a little bit of time and effort on your part to make it happen. Because of the bankruptcy, for a while you will notice that you will have problems getting certain loans or maybe even with such things as getting approved for a cellular phone. If you are able to get loans, mortgages or credit cards, the chances are really good that they will come to you with high interest rates attached. This can be frustrating, however, it is due to the fact that you have been labeled as a bad credit risk with all of the reporting agencies.
Some experts will tell you that a good step in obtaining credit after bankruptcy will be opening a brand new checking or savings account right after you have finished the court proceedings. This will give any possible lenders that you are rebuilding your credit future in a responsible manner. There are also several credit card companies out there who will take you on, even though you are a credit risk. Such credit cards will usually come with a hefty price tag such as high annual fees, account activation fees and high interest rates. However, you will be amazed at just how much these credit cards can help when it comes to your ability to raise up your credit score and establish your new credit after bankruptcy.