The following are some of the common questions clients ask about bankruptcy and credit. The answers are general information that should not be construed as legal advice.
What will my credit score look like after bankruptcy?
For about a decade after your bankruptcy, your credit report will show that you filed bankruptcy. However, many lenders may consider you a better credit risk than if you didn't file for bankruptcy because you will not be able to file for bankruptcy again for a number of years (eight years for a second Chapter 7 bankruptcy, for example). Thus, the bankruptcy may actually work to your benefit.
Can I reestablish my credit?
Yes! In fact, by using the bankruptcy code correctly and taking proper steps after bankruptcy, you can rebuild your credit very quickly.
Can I keep my credit cards after bankruptcy?
It depends. The credit card company will determine whether you can keep your credit card. Generally, when the credit card debt is discharged, the company will cancel the card. However, if you reaffirm the debt, you will likely be able to keep the card.
What are secured credit cards?
Secured credit cards allow a debtor to put money into an account as security for the card. Usually, debtors can only spend that amount at first, but spending limits will increase over time.
Is it better for my credit to file Chapter 7 or Chapter 13 bankruptcy?
The answer to this question depends largely on your financial situation. Chapter 7 bankruptcy allows debtors to eliminate their debt, but it may stay on your credit report for slightly longer than a Chapter 13 bankruptcy. Chapter 13 bankruptcy can be a better option for those who are behind on only some of their debt payments.
An experienced bankruptcy lawyer can help you determine how bankruptcy will affect your credit and plan for rebuilding your credit after bankruptcy.