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Tuesday, November 4th, 2008

by Theodore Sliwinski, Esq.

Obtaining Credit After Bankruptcy

The most common misconception about filing for bankruptcy is that most debtors erroneously believe that they will never get any credit again. Many of my clients are surprised that most everyone who files for bankruptcy will be able to quickly obtain credit again. In most cases a debtor can obtain new credit within days or weeks after he receives a discharge. Many of my clients have shown me offers for credit that they have received shortly after filing for bankruptcy. Sometimes the New Jersey Bankruptcy Center even receives offers for new credit cards for our clients after they have received their discharge.

Obtaining Credit after a Bankruptcy is Much Easier Than You Would Believe!

If you watch TV, listen to the radio, read the newspaper, or surf the net you will see countless advertisements that offer credit to many Americans who have filed for bankruptcy. There are a number of lenders who are ready, willing, and able to give you a new mortgage, give you a car loan, and issue you another credit card(s) because they know you are now out of debt. These credit offers will start at a higher interest rates. However, at least you will have a fresh start to rebuild your credit. Moreover, if you regularly make your payments, then you can negotiate for lower interest rates with your new creditors.

A bankruptcy filing will stay on your credit report for up to 10 years. Some lenders may view you as a credit risk because you have lawfully written off or discharged most of your previous debts.  However,  you will probably have the ability to repay any new consumer debts because you now have the disposable income to pay off your debts. These creditors are fully aware that since you have just received a chapter 7 discharge you can’t file for another bankruptcy for 8 more years. Your creditors will also realize you want to re-establish your credit, and that there is little chance that you  file for another bankruptcy.

There is credit available to thousands of New Jersey-ites who have filed for bankruptcy. In some scenarios it is more preferable to have bankruptcy on your credit report than to have marks on it for late payments, judgments, and other negative information. Some creditors consider a new clean slate better than an old marked up one.

Of course there are some serious drawbacks to filing for bankruptcy. Some employers now run a credit check as part of their employment process. Some health care providers such as dentists run your credit report before they provide you with any health care services. Insurance companies will also run your credit before they issue you a quote for any insurance policy. If you have a bankruptcy on your credit report then you may have much higher insurance rates. Finally, even though filing for bankruptcy is your federally protected legal right, many creditors, banks, lenders, and even family and friends may view you as a “loser,” “immoral,” or a “deadbeat.”