Life after Bankruptcy: Will I ever have credit again?

Bankruptcy can be a fresh start, especially if you take the right steps toward rebuilding your credit.

The number one concern of those who come to my Chula Vista law office is that they will have bad credit after they file for bankruptcy. They worry that their credit score will drop, that they'll never get a car loan or a home loan again, and that they won't be able to have a credit card.

But the truth of the matter is that most people who would benefit from filing for Chapter 7 or Chapter 13 bankruptcy already have a low credit score - plus enough debt to affect their everyday happiness and life in general. Most already have high credit card balances, late payments, loan defaults, maxed out credit cards, and debts in third-party collections - all issues that deeply affect credit.

While declaring bankruptcy will be a factor in your future credit opportunities for at least a few years, not declaring bankruptcy for those deep in debt could lead to continued poor credit for an unforeseeable amount of time. Bankruptcy will affect your ability to get credit initially, but it will also give you the incredible opportunity to get a fresh start and begin rebuilding immediately. With much or all of your debt erased, and with important lessons learned, you can begin to rebuild your credit and increase your credit score right away.

How can you begin to rebuild your credit in the weeks, months, and years after filing for bankruptcy in California?

• Pay all of your bills on time. Making on-time payments is a fast and powerful way to increase your credit score. It is also a great financial habit that will keep you from sinking into debt again. If you have trouble remembering to pay your bills, set up an auto pay through your bank account or try to pay your bills early.
• Get a secured credit card with a low limit. While it may seem odd to get a credit card in the wake of a bankruptcy, it is important to establish a new trend of responsible, on-time payments. As you get further from your bankruptcy, you will be able to apply for better credit card deals.
• Take out a small loan from your bank and pay it back in a timely manner. Again, establishing yourself as a person who pays back loaned money on time and in full is key to putting your old credit history behind you. In some cases, it helps simply to talk to your bank and ask what you can do to rebuild your credit.
• Focus on building your savings. The money that you put aside into a savings account from your paycheck acts as a safety net against financial emergencies and a safeguard against late payments. In addition, your savings can be used later as a down payment on a car or home.

Making the move to file for bankruptcy is a big decision, and discussing your options with a legal professional in your area could help you understand what choice is best for you and your finances. Call Chula Vista bankruptcy attorney Kerry Denton today at (619) 421-1000 to schedule a confidential, no-obligation meeting.