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After bankruptcy you can’t avoid credit forever

Bankruptcy isn’t the final nail in the credit coffin.It is nearly impossible to live without credit or at least an established credit history. Whether you like it or not it, credit will be needed in the future for one thing or another. Those who have filed either a chapter 7 or 13 bankruptcy are faced with the difficult task of reestablishing credit after the discharge of their old debt which is certainly more difficult than establishing credit the first time. Both types of bankruptcy will remain on the individual’s credit report for up to ten years and will serve as a huge impairment on anyone’s credit. Before new credit is established out of bankruptcy, people face suspicions by new lenders that they are permanently unable to effectively manage debt and therefore shouldn’t be able to acquire new lines of credit.Of course this is absolutely untrue.

 

There is a common misconception that once someone files bankruptcy they are no longer eligible for credit. This is absolutely untrue as you may learn when your mailbox is flooded with preapproved credit cards.Why would lenders take this chance? To put it plainly, it is only possible to file bankruptcy once every seven years (hopefully once is enough), so by offering you new credit they are assured that you will be legally bound for the next seven years to repay.  Also any credit cards or car loans they so kindly extend will without a doubt be tied to a massively exorbitant interest rate.The goal of bankruptcy is to learn from the past and not make the same mistakes. Avoid taking out a credit card or car loan at these incredibly unfavorable terms to prevent ending up in the same financial mess you were in before the bankruptcy. For many, bankruptcy is a last resort after suffering from circumstances outside of their control leaving it completely unfeasible to pay all debts and still survive day-to-day. Bankruptcy is available to help those hopelessly drowning in debt to start fresh, learn from the past and begin to build the future.This process also forces you to survive on a cash only basis, learning to build a reserve for emergencies and not spend more than you have available. Chapter 7 bankruptcies are the most cut and dry option as it wipes all previous debt (excluding child support, tax and federal debt) completely away and allows this individual to start fresh. To qualify for a chapter 7 bankruptcies there are very strict parameters that he/ she must fit into, including income requirements, circumstances surrounding the debt to be discharged as well as other factors. Outside of a chapter 7, there is the chapter 13 bankruptcy.This option requires he/she to be managed by a court-mandated supervisor to be sure all income is managed effectively.  A 13 also requires that the individual repay some or all of the debt before it may be discharged.This frequently prolongs the bankruptcy process but makes repayment more manageable and it gives them the opportunity to learn money management skills. To establish credit after bankruptcy you may want to consider a secured credit card. These are similar to a pre-paid credit card in that your maximum available credit is based upon your pre-paid reserve account with that company. In turn these credit card companies report your activity to the credit bureaus just as any other credit account would.  Additionally you may be able to reaffirm some of your debt while filing bankruptcy. For example you may be able to keep your car and continue to pay the loan if approved by the judge, and this will vastly help your credit, as it is an old line of credit. Most importantly don’t lose hope and learn from your past.Avoid making the same mistakes that put you in this stressful situation. "

After bankruptcy I can't avoid credit forever..

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Monday, 26 September 2022

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