Bankruptcy and Credit - What Happens After Your Debts Are Discharged?Bankruptcy
will remain on your credit report for ten years. But you may be able to get
credit fairly quickly - almost immediately after a bankruptcy - although you
will pay dearly for it.Due to anomalies in the credit scoring process, youre
likely to have a better score than you had while you were struggling with debt.
Also if you handle debt responsibly from then on, you will find your credit
score will be close to prime within a few years.Credit scoring gives more weight
to more recent events. So if you use of credit is down and youre handling your
debts responsibly, you score will go up. Remember you have to use credit to get
a credit score.Many lenders love to extend credit to recent bankrupts. They know
you have more free cash because most of your debts were discharged. They also
know you cant go bankrupt again for another seven years. So they will extend
credit, usually with outrageously high interest rates.If you managed to keep
your car and/or house through the bankruptcy, your first step is to pay these
bills on time.If you have to start fresh expect to pay. A car loan may carry a
21% interest rate. Credit cards youre offered might have an interest rate around
24%. These rates will make it very difficult to stay on top your debt. Many
experts advise that if you need a new car to get it before you apply for
bankruptcy and keep your payments up. Youll have a lower interest rate and will
be on your way to re-establishing credit.You might only qualify for a secured
credit card at first. You will have to make a deposit of several hundred dollars
with a bank, which will then grant you a line of credit in the same amount. If
you handle this card correctly, the card will be converted into a regular
unsecured card in a year or so. Make sure the lender is making periodic reports
about your good behavior to the credit bureaus.Dont use more than 20 25% of
your available credit, even if its only $500. Pay your bills on time. If you act
responsibly, in a few years you will be able to loans and mortgages at rates
only slightly higher than prime borrowers get.If you need to rent an apartment,
you might have more difficulty. Landlords who check your credit report might not
rent to you at all. Your auto insurance premium will likely rise and you might
have difficulty getting a new job. These are some of the downsides of going
bankrupt.Everything is not all brightness and light, but the few sacrifices you
will face might be worth the removal of the emotional and financial pain you are
suffering every day you struggle with a load of unpayable debt.Bankruptcy and
Credit - What Happens After Your Debts Are Discharged?Bankruptcy will remain on
your credit report for ten years. But you may be able to get credit fairly
quickly - almost immediately after a bankruptcy - although you will pay dearly
for it.Due to anomalies in the credit scoring process, youre likely to have a
better score than you had while you were struggling with debt. Also if you
handle debt responsibly from then on, you will find your credit score will be
close to prime within a few years.Credit scoring gives more weight to more
recent events. So if you use of credit is down and youre handling your debts
responsibly, you score will go up. Remember you have to use credit to get a
credit score.Many lenders love to extend credit to recent bankrupts. They know
you have more free cash because most of your debts were discharged. They also
know you cant go bankrupt again for another seven years. So they will extend
credit, usually with outrageously high interest rates.If you managed to keep
your car and/or house through the bankruptcy, your first step is to pay these
bills on time.If you have to start fresh expect to pay. A car loan may carry a
21% interest rate. Credit cards youre offered might have an interest rate around
24%. These rates will make it very difficult to stay on top your debt. Many
experts advise that if you need a new car to get it before you apply for
bankruptcy and keep your payments up. Youll have a lower interest rate and will
be on your way to re-establishing credit.You might only qualify for a secured
credit card at first. You will have to make a deposit of several hundred dollars
with a bank, which will then grant you a line of credit in the same amount. If
you handle this card correctly, the card will be converted into a regular
unsecured card in a year or so. Make sure the lender is making periodic reports
about your good behavior to the credit bureaus.Dont use more than 20 25% of
your available credit, even if its only $500. Pay your bills on time. If you act
responsibly, in a few years you will be able to loans and mortgages at rates
only slightly higher than prime borrowers get.If you need to rent an apartment,
you might have more difficulty. Landlords who check your credit report might not
rent to you at all. Your auto insurance premium will likely rise and you might
have difficulty getting a new job. These are some of the downsides of going
bankrupt.Everything is not all brightness and light, but the few sacrifices you
will face might be worth the removal of the emotional and financial pain you are
suffering every day you struggle with a load of unpayable debt. ABOUT
THE AUTHOR Chris Cooper is a retired attorney who has spent several periods
of his life deep in debt. At http://www.credit-yourself.com he tries to pass on
some of the knowledge he picked up in his journey to become debt free.
You may view the latest post at
http://www.richproject.co.cc/?p=3791
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