Myth #1: After Bankruptcy, No Credit for 7 to 10 Years
There is no truth to the urban legend that you have to go for seven years with bad credit after filing bankruptcy. Bankruptcy will be on your credit report for 10 years, but even so you can have good credit in just three years. Our clients often have purchased cars and even qualified for mortgages two to three years after bankruptcy.
People who file bankruptcy are often surprised by how quickly they’ll start getting credit card offers in the mail again. Offers for unsecured or secured credit cards (which require a deposit to the bank) with a low limit can arrive within a month of the debt discharge. Some of these cards are unsecured. Some are even offered to people by the same credit card company that was listed on the bankruptcy. Charles Juntikka discussed this in the New York Times. (Here is the link: http://www.nytimes.com/2012/04/11/business/lenders-returning-to-the-lucrative-subprime-market.html?pagewanted=all)
You should accept a credit card and start making regular, on-time payments to rebuild their credit. With three years of rebuilding credit, you will be able to finance a house at a good mortgage rate (if you are making enough money). Two years if you have veterans’ eligibility.
With a year rebuilding credit, you will start getting approved for $1000 and higher credit cards again. (You should probably get three or four credit cards, use each one for one or groceries or two tanks of gas a month.)
Ninety percent of your credit score is based on what you’ve done the last three years. So once you have three good years after bankruptcy, you’ll have a good credit score.
Myth #2: You Can’t Fix Your Credit Report After Bankruptcy
We make sure you know to do the things you need to do to get good credit in three years. We follow up with the credit bureaus after your bankruptcy is over to make sure your credit reports are right.
It is necessary to check your credit report after bankruptcy because major credit card companies try to leave bad marks on your credit report. They hope that these bad marks will cause trouble for people who filed bankruptcy. They hope that consumers will pay the bankrupt debt to remove it. About 50% of our clients have this problem.
We invite all of our clients to visit us after the bankruptcy and we take action to make the credit card companies to remove any bad marks from our clients’ credit reports.
Myth #3: People who file for bankruptcy are financially irresponsible.
“It’s far more likely that people run into very serious personal problems in one of three areas: losing their job, going through a divorce, or suffering a serious illness,” says Walter W. Miller Jr., who teaches bankruptcy law at Boston University School of Law.
Long-term unemployment, the legal fees associated with divorce, the cost of running two households following a divorce, or the high cost of medical care have all driven well-intentioned Americans into bankruptcy. As of April 2012, more than 5.2 million Americans had been unemployed for six months or longer, according to the Bureau of Labor Statistics. Meanwhile, a 2011 survey by the Centers for Disease Control and Prevention found that 20 percent of American families had problems paying medical bills in the past year.