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 many consumers work hard to rebuild their credit in the years after bankruptcy. Many consumers receive credit card offers in the months after filing bankruptcy. Our clients often have purchased cars and even qualified for mortgages two to three years after bankruptcy.
The fact that bankruptcy clients often receive credit card offers was mentioned by Charles Juntikka in this New York Times story. (Here is the link: http://www.nytimes.com/2012/04/11/business/lenders-returning-to-the-lucrative-subprime-market.html?pagewanted=all)
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 re-build your credit. We follow up after your bankruptcy to review your credit reports to be sure they show that you are no longer in debt.
It is necessary to check your credit report after bankruptcy because major credit card companies sometimes try to leave bad marks on your credit report. They hope that these bad marks will cause trouble for people who filed bankruptcy.
We invite all of our clients to visit us after the bankruptcy and we take action to make the credit card companies 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.
This has been our experience: unemployment, divorce, medical problems along with low paying jobs cause nearly all bankruptcies. Financially struggling families use credit cards to pay for emergencies because they have no savings. According to the Federal Reserve Bank, about one half of all consumers have virtually no savings. Once families borrow too much to pay for emergencies, the credit card companies raise their interest rates and trap these families in debt. Bankruptcy becomes the only way out to re-start their lives.