The Aftermath: Rebuilding Credit and Financial Stability Post-Bankruptcy

CAN YOU RECOVER FROM BANKRUPTCY?

Bankruptcy is a difficult choice. It can be a complicated and sometimes frustrating legal process that can damage your credit – temporarily. However, you can rebuild your credit and reestablish your financial stability after bankruptcy, and a North Carolina bankruptcy lawyer can help.

Depending on the type of bankruptcy you file, your bankruptcy stays on your credit report for seven to ten years. The impact of bankruptcy on your finances fades over time, and you can take a number of steps to improve your situation during the bankruptcy period and immediately after.

What practical measures can you take to rebuild your credit and reestablish your financial stability after bankruptcy? Here are several of the steps you can take.

STEP ONE: UNDERSTAND YOUR CREDIT REPORT

Repairing your credit after bankruptcy starts with understanding your credit report, and your North Carolina bankruptcy attorney can address any concerns you have regarding the report. You can access a free copy of your current credit report at AnnualCreditReport.com.

Learning how your credit score is determined helps you understand why your credit score may be moving up or down. Reviewing your credit reports lets you find any inaccuracies that may be hurting your credit score and gives you the opportunity to have those mistakes corrected.

When you review your credit report on a regular basis – after bankruptcy, you should review it monthly – you will also be able to verify that your bankruptcy has been removed from your credit report ten years after a Chapter 7 bankruptcy or seven years after a Chapter 13 bankruptcy.

STEP TWO: DEVELOP CONSCIENTIOUS CREDIT HABITS

After bankruptcy, your credit score should begin to improve over time, and if you take care to develop good credit habits, your credit score will continue to rise. These good credit habits include:

making full payments to your creditors on time, every time
using your credit cards as little as possible and keeping your balances low
creating and slowly building up a personal emergency fund
having patience and understanding how long it takes to rebuild your credit
maintaining good credit habits even when your credit score is good or excellent

STEP THREE: OBTAIN A SECURED CREDIT CARD

A secured credit card is a popular way to begin rebuilding credit after bankruptcy. The card is financed by cash you deposit into a savings account. That account functions as collateral on the card’s line of credit, and the card’s limit is determined by how much cash is in the account.

However, unlike most debit cards, a secured credit card’s activity is reported to credit agencies, so it can help you rebuild your credit. The interest rates on these cards are high, but some secured cards let you “upgrade” to an unsecured card after you have made consistent on-time payments.

STEP FOUR: TAKE OUT A SMALL INSTALLMENT LOAN

Another way to begin rebuilding your credit is to ask a co-signer to help you qualify for a small installment loan such as a car loan or a personal loan. A small installment loan, borrowed with a co-signer, can help you rebuild your credit if you make full payments on time each month.

However, your co-signer’s credit score will be damaged if your payments are late, if there is any failure to make a payment, or if you default on the loan, so you should consider carefully who you ask to act as your co-signer.

HOW LONG CAN IT TAKE TO REESTABLISH YOUR CREDIT AFTER BANKRUPTCY?

While your credit score may go up some within a few months after the conclusion and entry of the Discharge of your bankruptcy case, it may take 2-5 years to rebuild your credit to your desired level. Repairing your credit and reestablishing your financial stability means being consistently proactive and vigilant immediately following the conclusion of your bankruptcy by utilizing some of the steps discussed above.

A Chapter 7 bankruptcy will stay on your credit report for ten years. It must be deleted from your credit report at that time. However, you may see your credit score improve within a year or two because the bankruptcy process will quickly begin to reduce your debt-to-income ratio.

A Chapter 13 bankruptcy appears on your credit report for seven years and must be deleted at that time, but you may be able to refinance your restructured debt in as little as eighteen to twenty-four months after filing for bankruptcy.

IS BANKRUPTCY THE RIGHT DECISION?

If your debt seems overwhelming, bankruptcy may or may not be the right decision for you. North Carolina consumers who are struggling with debt may have other options. If you are one of these consumers, discuss your options as quickly as possible with a North Carolina bankruptcy lawyer.

A bankruptcy lawyer can examine your financial situation to determine if there is an equally effective – but less drastic – option for resolving your debts. Your North Carolina bankruptcy can provide you information concerning all options available to you including debt settlement.

However, if a negotiated settlement of your debt is not possible, and if bankruptcy is your only practical option, you’ll find there can be credit and prosperity on the other side of the bankruptcy process for those who take advantage of the opportunity and benefits that bankruptcy provides.

GILLESPIE & MURPHY WILL WORK WITH YOU AND FOR YOU

Wherever you are in North Carolina, if you feel overwhelmed by mounting debt, and if you are considering bankruptcy, you need help now. Let a bankruptcy attorney at Gillespie & Murphy review your debts and finances and help you decide if bankruptcy is in fact your best option.

An attorney at Gillespie & Murphy will ensure that your bankruptcy petition is complete and accurate, that your financial papers are in order, and that you avoid the common mistakes and misunderstandings that could delay your bankruptcy or even cause your petition to be rejected.

If you are sued for a debt, or if you face a foreclosure or a vehicle repossession, the team at Gillespie & Murphy can help. Since 1991, we have provided legal assistance and sound advice to consumers throughout North Carolina.

You can contact Gillespie & Murphy now by calling 252-659-5045 to arrange – without any cost or obligation – your first consultation with a debt and bankruptcy attorney. No matter how serious your debt problem is, an attorney at Gillespie & Murphy will find the remedy you need.