When you are considering the option of bankruptcy, you’ll often wonder what will happen after the bankruptcy process is completed. Will you ever be able to buy a home? Will you ever be able to take out another car loan? Will your credit be forever ruined? The truth is that while bankruptcy may hurt your credit in the short term, in the long term it may actually help. Filing for bankruptcy does not ruin your life. What it actually does is give you a fresh start. The key is to find a good bankruptcy attorney to help you through the process so that you can understand which type of bankruptcy is best for you to file and what you should do to start rebuilding credit after the bankruptcy process.
Will You Be Able to Get a Loan?
There is a common myth that people who claim bankruptcy will have to wait 10 years to get a loan for a home or a car. This is far from true. In fact, some people who claim bankruptcy can obtain a mortgage one to two years after the bankruptcy has been discharged. If you are planning on claiming bankruptcy, chances are that your credit is already ruined. Few things will change in regards to your credit eligibility after claiming bankruptcy, other than the fact that you won’t be burdened by insurmountable debt and you can start to rebuild your credit immediately.
Will You Be Able to Get a Credit Card?
After your bankruptcy is discharged, creditors will flood you with offers for low-balance credit cards to help you rebuild your credit. The problem is, these cards often come with unreasonably high activation and membership fees that push you near your credit limit before the card even arrives at your door. If you want to rebuild your credit, you are better off obtaining a secured card with reasonable annual fees and interest rates. Always choose new credit card accounts with care and don’t feel as though you have to grab at any offer extended to you, as many of them will be unreasonable.
Expect to Pay Higher Interest
The first few loans and credit cards that you do get after bankruptcy are going to come with higher interest rates. This is due to the fact that you will be considered a higher credit risk. Don’t let that sway you from taking these loans. You can always refinance down the road. The exact interest rate you are offered will depend on your credit score, which will be low after claiming bankruptcy.
Discuss Your Options with an Attorney
Before claiming bankruptcy, whether it be Chapter 7 or Chapter 13, it is always best to discuss your options with a bankruptcy attorney. A bankruptcy attorney can help you determine if bankruptcy really is your best option and if it is, which type of bankruptcy you should file for. He or she can then help you and represent you throughout the complicated and oftentimes overwhelming bankruptcy process. Your attorney can also help you understand your credit options after your bankruptcy has been discharged.