Chapter 13 Bankruptcy Lawyer
Dealing with overwhelming debt can be solved in a few ways. However, one of the best ways to dispense of it and wipe the slate clean is through bankruptcy. This legal process sets out to pay what debts can be paid, either through selling assets or a payment plan. Once the terms of either are fulfilled, the rest of the debt is discharged, and the bankruptcy closed.
What happens to your credit after bankruptcy? Credit is a fundamental necessity for those who do not have a lot of cash in the bank. It is what allows you to purchase cars, homes and even get loans for things like medical care. Filing bankruptcy puts a hold on existing credit and brings your history back to nil. How do you rebuild credit after deciding to file bankruptcy? The good news is that it is a process that often does not take long.
Bankruptcy and Your Credit Report
Chapter 7 bankruptcy affects your credit longer than Chapter 13. In Chapter 7, debts are eliminated. This type of filing stays on your credit for 10 years. In Chapter 13, however, debts are negotiated and a payment plan established. This debt restructuring allows you to pay off some or all of your debt in three to five years. Thus, Chapter 13 is more favorable to your credit and only remains for seven years.
The Affect of Bankruptcy on Credit
You will be able to get credit cards and secure loans after bankruptcy. However, the terms may be different. For instance, the first credit card you get after bankruptcy may need to have a deposit. This secured credit card retrains you to handle debt by forcing you to deposit a sum of money with the credit card company. This is your allowed balance. When you demonstrate the ability to rack of debt on the card and pay it, the deposit is typically refunded, and the balance amount increases. The timing of this is based on how much money you secure the card with and when the bankruptcy discharged.
Get Someone To Help
One way to rebuild credit without amassing any debt is to become an authorized user on someone else’s credit account. If your spouse, parent or sibling has a good credit rating, ask them to add you to one or more of their cards. You do not need to charge anything or even possess a card. Your name added to the account of a credit savvy person can send score soaring.