Credit After Bankruptcy Discharge

Can I Still Get Credit?

You can still get credit after bankruptcy discharge. This is one of the issues that deter many people from filing for bankruptcy; however, this should not have to worry anyone.  

You can also still get credit cards after bankruptcy discharge. However, if you filed for bankruptcy while you owe money to your credit card institution, you have to put down your card as a debt. Therefore, you are legally bound to notify your credit card company about the bankruptcy.

If you did not owe the credit card company anything; you are not obligated to notify them about filing bankruptcy. However, some companies may cancel your credit card once you file for bankruptcy while others may require you reaffirm your balance and enter into a new agreement to allow you to continue using your credit card.  

Even if you are allowed to keep your credit card after bankruptcy discharge, you should know that you will now probably have lower limits and higher interest rates. 

If the only kind of credit card you will be eligible for is a secured card, then your limit will be dependent upon the amount you have deposited in that account – raise the amount deposited, the limit goes up.  

Car Loans?

You can also get credit after bankruptcy discharge when it comes to car loans. Some car companies may be willing to work with you since the loan is secured by the car itself and can be repossessed if you default on your payments.

However, you should again expect your interest rates to be high for a period of time until you can prove to the car company that you are financially stable. After making your car payments on time, see if there are any companies that will refinance the loan at a lower interest rate – it does not cost you anything to ask! 

Re-establish Your Credit

Working to increase your credit score is very important since you may then be eligible for additional credit in the form of a mortgage loan. However, this is not as easy to get as a credit card or a car loan. You have to re-establish your credit and increase your credit score. The general rule for applying for a mortgage loan is about 18-24 months after bankruptcy discharge.  Mortgage lenders need to be sure that you are back on track financially and that you can make mortgage payments in a timely manner.  

Additional credit after bankruptcy can be granted to you after you get your mortgage loan. This credit is in the form of home equity loans.  Be cautious and smart when it comes to adding debt after a bankruptcy. 

Remember, in order to get credit after bankruptcy discharge, you have to show that you are now financially stable and have a steady job. To build your credit, you must make sure all your bills are paid on time, you are not accumulating debt, and have set-up a savings account.  

You can take precautions to make sure the problems that caused the bankruptcy are not being made again by:

• avoiding excessive spending
• limiting credit card use 
• making an effort to begin saving money on a regular basis
• living within your income even if it means living on a tight budget in order to save and pay cash for what you want or need
• be prepared to change your lifestyle

Credit after bankruptcy discharge is not a problem if care is taken not to fall back into bad spending habits. The result of making good changes will be:  buying a home, car, and living a life free from the stress of overwhelming debt.