Repairing Credit

While most bankruptcy clients promise themselves that they will never again have or use a credit card, some consider keeping at least one of their old cards for convenience or emergencies after their bankruptcy is over.  In fact, there is usually no reason for you to retain any of your old credit cards through your bankruptcy.   Most people receive unsolicited credit cards soon after they file bankruptcy.  Bankruptcy debtors receive new credit cards because they are a better credit risk after wiping out their debts in bankruptcythan they were when they owed money to many creditors.  Also, bankruptcy clients cannot file against newly issued credit cards for eight years.  For most people, bankruptcy makes it easier, not harder, to get new credit cards.

As soon as you receive your bankruptcy discharge, you will be able to qualify for some basic consumer loans, although at a higher interest rate.  The good news is most lenders state that it takes no more than four years to reestablish a normal credit rating provided you pay debts currently and make sufficient income.  Within four years after receiving a Chapter 7 discharge, most people are able to purchase cars and homes with normal interest rates and terms.

At one time bankruptcy destroyed peoples’ credit.  Banks used to believe personal bankruptcy was a stigma on credit that a debtor could not overcome.   Today, so many people file bankruptcy every year that banks cannot ignore this large market of potential customers.   While no one plans to file bankruptcy, the effect of filing today is not nearly as bad as your creditors would like you to believe.

Credit scoring is not a legal issue. There are no bankruptcy laws or rules concerning how a debtor recovers their credit rating after filing bankruptcy. Your bankruptcy attorney may have an opinion about credit repair based on the experiences of his clients, but your bankruptcy attorney probably has no professional knowledge about how banks score credit ratings of bankruptcy debtors.

Jon Alper

About Jon Alper

Jon is an attorney focusing on bankruptcy and asset protection in Orlando, Florida.