Those considering bankruptcy frequently worry
that they will never get credit after a bankruptcy, or that it
will be 10 years before they can get credit. Neither is true.
If you owe money on a credit card at the time
you file bankruptcy, you must list the card as a debt.
Remember, the schedules are filed under penalty of perjury:
perjury in connection with your case can lead to denial of
discharge of all of your debts. It is also a federal crime.
If you don't owe anything on the card, you
don't have to give the credit card company notice of your
bankruptcy. Note, however, that they may find out through other
means and cancel the card as a precaution.
Most credit card companies will
allow you to keep their credit card for use after bankruptcy if
you agree to reaffirm the balance on the card and enter into a
new agreement, signed after the bankruptcy filing. The decision
is up to the creditor, but most creditors want to avoid
the loss incurred when the debt is discharged, and want
your future business.
Our experience is also that newly
discharged debtors are frequently solicited for new cards!
In today's competitive lending
environment, credit is available to the recently
bankrupt. It may be more expensive than before, and available
with lower limits, but it will offered. A secured
credit card is usually available post bankruptcy at lower rates
than unsecured cards.
Rebuilding credit worthiness
after bankruptcy is a matter of obtaining a toe-hold in the
credit world and treating that credit with respect. Use credit
cautiously and pay on time. Improving your credit score.
Absolutely. Studies show that
18-24 months after a bankruptcy discharge, bankruptcy
debtors can qualify for a loan on the same terms as if they had
not filed bankruptcy. That means that the lender will be much
more interested in your down payment, the stability of your
income, and the relationship between the loan payments and your
monthly income than your past financial troubles.
In my opinion, bankruptcy is no
more harmful to your credit record than the financial facts that
lead to the bankruptcy filing. I believe it is much more
important to look at your net worth (assets minus debts) than at
your ability to borrow in the future.
Most debtors in bankruptcy
proceedings, even those who have never missed a payment,
couldn't get new credit from a lender who truly looked at their
financial condition. So the fact that there are no negatives on
their credit report is only marginally meaningful when looking
at the whole picture.
Bankruptcy at least makes all the
debt shown in the negative history unenforceable. Objectively,
a debtor is a far better credit risk after bankruptcy
than before. Subjectively, credit managers are individuals who
may not understand bankruptcy or look beyond its negative
Remember that a bankruptcy is not
going to erase the record of your debts listed in your
bankruptcy. Credit reporting agencies are within their rights
in showing accurate history about your financial affairs. You
want to make sure that the bankruptcy discharge also shows on
the credit report so that creditors understand that those old
creditors have no legal claim remaining. Correct any errors on
your credit report.
The point of bankruptcy is to be
able to SAVE after bankruptcy, not necessarily BORROW again.