Getting Credit After Bankruptcy: How? Why? When?

Saturday , 5, October 2013 Leave a comment

Bankruptcy Lawyer in Point Pleasant NJ.

When debtors have decided to file bankruptcy the looming question on their minds is commonly how long will it take before I have credit again? Unfortunately the answer is not in black and white and the answer fluctuates with the economic times.
As the Great Recession has set in it has affected us all. The meltdown of the housing market and banking institutions has caused the credit market to constrict.  With the tightening of the credit market banks are not so quick to extend credit except to customers with exceptional credit.
Before the Great Recession the credit card companies and banks extended credit cards to customers very liberally, even to those consumers who recently had filed for Chapter 7 bankruptcy and Chapter 13 bankruptcy.
But credit may be easing up again. According to, “Credit card companies are eager to take advantage of the resilient American shopper — the number of new cards issued to consumers rose 14 percent in 2011 to about 42.3 million, according to TransUnion.In a sign of thawing credit conditions, more than 10 million cards were reportedly issued to consumers with dubious credit histories.”

With these types of numbers being reported it appears that credit card companies believe the economy is improving, and they are shifting their focus away from only lending to non-prime consumers now offering new credit card accounts to prime consumers once again.
This type of news and economic indicators translate into more offers for those who have filed bankruptcy and are looking to rebuild their credit. Once more the offers in the mail start arriving offering new extensions of credit.
Although a bankruptcy filing is certainly a negative factor that creditors will consider in deciding whether to extend credit, this fact becomes less and less important over time. Even though a bankruptcy can remain on one’s credit report for up to 10 years, its effect diminishes on a regular basis each month that goes by after the bankruptcy cases is closed.

Liz Weston the author of “The 10 Commandments of Money: Survive and Thrive in the New Economy,” offers a nice article on how to recover from a financial nightmare. After bankruptcy you may feel like you have been burned by your creditors and therefore feel that credit will no longer be part of your life. In fact you may swear off credit cards. However, you will need to deal with the creditors once more in rebuilding your credit worthiness after bankruptcy.

What’s important after bankruptcy is getting a hold on the credit world and treating that credit with respect.  Use your credit cautiously, pay on time and don’t rely on credit to live.  The Motley Fool has some nice online calculators to help you plan on doing just that. One of them shows how long it will take to pay off your balances.

You may ask why would I want credit ever again after it bankrupted me? Well the answer is that your credit scores will be determining factors if you ever want a mortgage or an auto loan. Aside from purchasing material things your credit score/information is also used by insurers, landlords and employers.

So what is the good news? The good news is that you do not have to take on mountains of debt to fill your credit reports with positive information and move your score and history in a positive direction.

Repairing your credit will require you having and responsibly using credit cards. If you don’t have or can’t get an unsecured credit card right away as Liz Weston suggests, “consider getting a secured credit card, where you make a deposit with the issuing bank — usually $200 to $1,000 — and get a card with a limit in the same amount. If you use the card lightly but regularly, charging no more than 30% of its limit and paying it off in full every month, your credit scores should slowly improve.”

And for please DO NOT fall for credit-repair scams. There is nothing a credit repair company can do for you that you can’t do for yourself, other than take your money.

The New Jersey personal bankruptcy attorneys at Riviere Cresci & Singer LLC can answer any questions you may have concerning bankruptcy. If you live in New Jersey, including Shrewsbury,Spring Lake, Brielle, Belmar and Bradley Beach call us for a free consultation to find out how we can help you.

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