In these financially uncertain times, you may be considering bankruptcy as an option to resolve financial commitments and start over.
Just as any major financial decision would, such as financing a car or home, or applying for any other type of credit, the filing of a bankruptcy case will show on your credit report. The good news is, you will almost certainly qualify for credit again––though not immediately.
How Long a Bankruptcy Stays on Your Credit Report
As you might expect, a bankruptcy dramatically affects your credit score. A bankruptcy case filing remains on your credit report for seven to ten years.
As a recent US News and World Report story outlines, “Discharging debt can help you start anew, but it doesn’t wash away the months or years of financial issues, such as missed loan payments and out-of-control balances.”
It’s important to consider your personal financial goals following a bankruptcy. It is possible to get an unsecured personal loan after bankruptcy, but you may be looking at significantly unfavorable terms. Considering buying a home or a car? A bankruptcy could delay those plans due to difficult new loan terms you’ll face.
How You Can Rebuild Credit Following a Bankruptcy
The first option is to consider having someone with good credit co-sign any new loans or credit cards you apply for. There may be additional options if you have a mutual co-signer, including putting up additional collateral towards the loan.
According to Lending Tree, another option would be a “credit builder” loan, which is often secured by the proceeds of the loan itself. If you can make your payments on time, you can work towards rebuilding your credit through the interest and other fees these loans typically charge.
You could also look into a secured credit card that requires a security deposit to help rebuild credit. That deposit is equal to your credit limit and if you make payments each month, you’ll begin rebuilding credit in a reliable and responsible manner.
Above all, it’s important to consider how a bankruptcy will affect your whole financial plan once the proceeding has ended and all debts have been settled. The qualified bankruptcy attorneys at Natural State Law are effective advisors in the Little Rock area. Call us at (501) 261-0226 to discuss how we can guide you through the bankruptcy process.