When facing bankruptcy, one of the biggest worries clients have is that
they’ll never get credit again—or at least not for the 10
years during which bankruptcy shows on their credit report. When I tell
clients it won’t be as difficult as they fear, I usually hear a
sigh of relief. Bankruptcy will affect your credit score in the beginning,
but you will be able to get credit again and rebuild your score. Bankruptcy
actually helps your chances of getting credit if you had high credit card
debt before the bankruptcy and collections or charge-offs. Bankruptcy
gives you a clean slate.
Credit cards: Many people get offers for credit cards right after bankruptcy. There
are a number of companies that specialize in
credit cards after bankruptcy because they can get higher interest rates or fees. Make sure you understand
the terms of these offers and take the best one.
Secured credit cards: A bank or credit union may give you a secured credit card. This is where
you give the bank funds to “secure” the credit on the card.
Some lenders might want you to deposit the full amount of the credit limit
(e.g., a $500 deposit in exchange for a card with a $500 limit), whereas
others might only require you to secure a certain percentage of the limit
with a deposit (e.g., a $250 deposit in exchange for a card with a $500 limit).
Car loans. Just like with credit cards, there are auto lenders out there who will
give you a car loan right after bankruptcy, perhaps at a higher interest
rate. Another option is to get a co-signer for the loan. The lender may
agree to refinance it later if you make regular on-time payments for a
period of time.
After about six to twelve months of on-time payments toward new accounts,
even small ones, your credit will start to improve. From there, getting
more credit should get even easier. Some people who work diligently toward
rebuilding credit can even buy a house just a few years after bankruptcy.
If you have questions about your credit after a
bankruptcy in San Diego, feel free to call me at
Denton Law Group at