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Rebuilding credit after the debt relief of bankruptcy

New Jersey residents struggling with out-of-control debt may be considering bankruptcy. While Chapter 7 and Chapter 13 offer debt relief via different methods, there are ways with each to begin working toward financial stability almost immediately after a petition has been accepted. An attorney can help offer insight into any legal restrictions related to applying for credit after a declaration of bankruptcy, but generally, it is up to a lender to determine who qualifies for what particular types of loans or credit card.

While Chapter 7 bankruptcies are typically discharged within about three months, Chapter 13 repayment plans may take up to five years to be completed. During that time, it is not unusual for filers to need to apply for a new line of credit or credit card before their bankruptcies are fully discharged. Applicants are advised to be cautious, however. While it is wise to begin attempting to rebuild credit following bankruptcy, cards with high interest rates or built-in fees – likely the only types initially available to bankruptcy filers – may end up causing the same debt problems as before if not carefully managed.

Whenever possible, it can be useful to pay off the entire credit card balance on time every month. A balance does not have to be carried over from month to month in order for it to help a credit score improve. Banks and credit unions also offer an option known as a secured credit card. With this, the lender requires a deposit into a savings account, which guarantees or secures any charges up to the credit limit. Any purchases made on the account can them be paid off on a monthly basis, demonstrating responsible credit practices.

With the help of an experienced New Jersey attorney and some careful planning, filing for personal bankruptcy can be the first step toward a brighter financial future. Whether an individual uses Chapter 7 or Chapter 13 bankruptcy to achieve debt relief, there are ways to begin rebuilding credit almost immediately. A lawyer can counsel on the different options and offer guidance throughout, helping individuals work toward future financial stability.

Source: experian.com, "Can I Apply for Credit Cards After Declaring Bankruptcy?", March 8, 2017

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Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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