Your ability to reestablish credit after filing bankruptcy is better than it has ever been. Most of my clients are really concerned about how a bankruptcy filing will affect their credit score. Unfortunately, negative but truthful data must stay put on your credit report. A credit report is a history. Under federal law, you are entitled to an accurate history, but not to a re-writing of truthful history. That history can properly include delinquencies or bankruptcy. A bankruptcy discharge will not erase discharged creditors or your pre-bankruptcy payment history. After a bankruptcy discharge, the amount outstanding for each discharged account should be shown as zero.
Nothing in credit is "forever." A bankruptcy can remain on your credit report for up to 7 years (Chapter 13) or 10 years (Chapter 7), but its effect on your credit score can start to diminish the day your case is closed — if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit, and not applying for too much credit at once. After you receive a bankruptcy discharge, you could attempt to live on a cash-only basis, and that may be a smart choice for those who can’t really handle credit. However, the ultimate irony after receiving a discharge of debt in bankruptcy is that, if you want to rebuild your credit score, you have to get and responsibly use credit.
Here are some tips on responsibly and successfully reestablishing your credit after filing bankruptcy:
Once your case is discharged, you will receive many solicitations from lenders offering to finance homes, vehicles and credit cards. Choose how much you borrow and who you borrow from very carefully. Don’t fall back into bad habits. You may also receive offers from “credit clean-up” or “credit improvement” companies, but don’t waste your money. A lot of these companies are running scams and you are more than capable of handling an incorrect entry on a credit report. Anything these companies can do you can do better and at no cost.
If you live in Northern Utah and are considering bankruptcy, contact the Law Office of Marji Hanson to discuss your debt management options and solutions that will work best for your financial circumstances.