One of the many questions a bankruptcy attorney is asked is, “When can I rebuild my credit after bankruptcy?” This is a very intelligent question, and it shows that clients are aware that their bankruptcy can put a dent in their credit; in addition, it shows that they are considering pro-active measures to rebuild their credit after they are relieved of their heavy debt.
There are some differences in rebuilding credit following a Chapter 7 bankruptcy versus a Chapter 13 bankruptcy that I think our blog readers should understand.
Rebuilding Credit in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, you can attempt to rebuild your credit as soon as you receive your bankruptcy discharge. This means you will have to wait the usual three to four months that it takes to get your bankruptcy discharge. Some cases may take longer, especially if creditors are objecting to the bankruptcy.
The bankruptcy will be on your credit report for 10 years, but you can attempt to obtain new credit during the course of this period. Some credit cards or other lenders may work with you because the bankruptcy puts you in a better position to pay back new loans. Additionally, since you just filed a bankruptcy, the lenders know that you will not be allowed to file another discharge for several years.
Rebuilding Credit in Chapter 13 Bankruptcy
Chapter 13 bankruptcy stays on the credit report for only seven years. However, you have to fulfill a three to five year bankruptcy plan before your bankruptcy discharge. On a brighter note, the seven-year period that the bankruptcy is on your credit report begins on the day of your filing date. Therefore, by the time your plan is up, you will only have the bankruptcy on your credit report for two to four years, depending on the length of your repayment plan.
In some instances, you may receive court permission to take out a loan during your bankruptcy plan, which will allow you to build some new credit. Once you have completed your plan, then you will no longer need the court’s permission.
Here is a link to our page on some steps on how you can rebuild credit. Additionally, see how the Law Firm of Kevin D. Judd helps financially struggling individuals in Washington DC and in Maryland by following the firm’s Twitter and Facebook pages.
[Did You Know? Secured credit cards are available for some people with bad credit and can help in improving credit if used responsibly.]
Law Firm of Kevin D. Judd – Maryland and Washington DC bankruptcy attorney
