Once the discharge of a Chapter 7 or Chapter 13 bankruptcy has been granted, the debtor must reestablish their credit, and the first step to this would probably be to get a secured credit card. A secured credit card is given by the bank, and is secured by whatever amount of money the cardholder deposits in the bank account for that purpose. The charges on the card are limited to the amount that is deposited, which will stop running up too much debt again, but allows the positive credit experience to be reflected on one’s credit report. This first step will help make the debtor eligible for alone in the future.
One of the consequences of a bankruptcy filing is that if the person who filed wishes to buy a house in the future, usually there will be around a two-year wait after the Chapter 7 case was discharged before a lender would even look at the application for a home loan. When an individual files a Chapter 13 bankruptcy case, the individual will not be able to apply for credit without permission of the court and until 24 months after all their debts are paid off in full. During the two year window in both cases, the debtor will have to be consistently employed to show stability.
After filing for bankruptcy, it’s recommended for rebuilding your credit is to establish credit with at least four creditors. At least one or more of these should be a secured credit card. Many department stores and credit card companies will also often allow people with bad credit to obtain charge cards from them. The downside is the limit will be low and interest will be high. Another post bankruptcy filing tip to improve your chance of getting a loan is to apply with oil companies, auto insurance, water department and your phone company to give you a clean credit reference letter after one year of making your payments on time. Even though one of the consequences of bankruptcy is that it stays on your credit record for 10 years, being debt free and other positive effects are certainly going to be helpful to raising a consumer’s overall credit rating in the future.
Most of all this seems tedious and time-consuming. Debtors should know ahead of time before filing bankruptcy that these are the consequences that you might incur. One of the easiest loans to get after you file for bankruptcy is an automobile loan. The reason that auto loans are easier is they are secured by the automobile. Usually the lender will require a large down payment and higher interest rates to qualify you. Many times you can shop online for lenders who will give you an application for a loan on a vehicle. By shopping online you’ll be able to see the different interest rates and requirements for the loan. The most important item that lenders want to see is steady employment and being current on all your payments since the Bankruptcy. Another place to look for an auto loan is going to dealerships that specialize in bad credit. If you stay current on your payments, within a few years you’ll see your credit rating continuously going up