So you've taken a good, hard look at your financial situation, and you've determined that bankruptcy is the only viable way out. You're probably wondering, though, if you'll ever be able to establish credit again. This is one of the things that keeps many people from filing bankruptcy, even when they know there's no other good option.
The good news is, you can reestablish credit after bankruptcy... and faster than you might think. It's often easier to rebuild credit after bankruptcy than it is by continuing to struggle to pay your debts. There are two reasons for this: First, you've got a clean slate to work with - you won't be trying to divide your income among all the creditors who are hounding you every day; second, if your credit is already in the trash, bankruptcy will actually improve your credit score as soon as your debts are discharged.
The first thing you should do after a bankruptcy discharge is obtain a credit card. If you're lucky, you might find a company willing to give you a low limit unsecured card... but if you can't do that, at least get a secured card. Having a credit card in your name and making your payments on time will do wonders for your credit score.
After you've obtained a credit card, try looking for a secured line of credit. Some stores will offer lines of credit for home goods, electronics, and other items. Again, you want to make sure you make your payments on time, so the account will be reported to the credit bureaus as current.
In about a year, you will have rebuilt sufficient credit to be considered for a car loan. The interest rate might shock you, but a car loan will help your credit score considerably.
In two years, you will be eligible for an FHA home loan. If you're thinking about buying a house, this is the time to do it. Your interest rate will be one or two percent higher than standard loan interest rates, but by keeping your mortgage payments current, you should qualify to refinance the loan after about two years.
You don't have to wait for years after bankruptcy to begin building your credit. In fact, waiting to reestablish credit will only hurt you in the long run. Using a methodical strategy immediately after discharge will help you put the pieces back together within just a couple of years.
And by now I bet you are ready to learn more about whether bankruptcy is right for you, right? So then now I would like to invite you to claim your FREE information when you visit http://www.NewYorkBankruptcyHelp.com
You'll get tons of free information about filing for bankruptcy, dealing with harassing bill collectors, and hitting the reset button on your financial life. You’ll also get my free book about how to fight back against abusive bill collectors.
From Jay Fleischman, Esq., Managing Attorney at Fleischman Consumer Law Center.
