There is life after bankruptcy. There is also credit after Bankruptcy. If you live in Houston, San Antonio, Dallas, or Austin or anywhere in Texas and you watch TV, listen to the radio, read the newspaper or surf the Internet you will see advertisements offering credit to people who have filed for Bankruptcy. There are a number of lenders who are willing to mortgage homes, finance vehicles, and issue credit cards to those who have received a Bankruptcy Discharge. Why? It’s because with a Chapter 7 or Chapter 13 Bankruptcy Discharge you are often considered a clean slate with a fresh start. And, potential lenders know you are either out of debt or have significantly reduced your debt and cannot file bankruptcy again for a number of years. Your income vs. debt ratio is now substantially lower after the bankruptcy filing. And now, since all or most of your debts are discharged, you should have a lot more disposable income which new lenders hope you’ll spend on luxury items. The bottom line is that after a bankruptcy discharge you essentially now are “debt-free”.
Although, after discharging your debts in a Bankruptcy you will have a fresh start, you will also have some new challenges to face. Primarily you will have to start the process or reestablishing your credit after bankruptcy. Even if you never want credit again, the need for good credit is certainly a fact of life in our society. Everything from renting an apartment to financing a house or car, and sometimes even new employment requires good credit. If you filed for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy then your credit rating probably wasn't anything to speak of before the filing. That’s alright, because you chose bankruptcy as a responsible method of debt relief are starting over. After filing for bankruptcy, your credit report will reflect the Bankruptcy filing and will stay on your credit report for up to 10 years. Many potential lenders in Texas may see you as a bad credit risk since you were able to legally write off some, if not all of your prior debts. Despite that, there are many other lenders who will be willing to offer you some type of credit to start the rebuilding process of your new financial future.
Shortly after your bankruptcy discharge you will most likely receive mail solicitations for secured credit cards, car loans, and other similar offers. How do we know? Our clients who have received discharges show us the letters and our office has even received the very same credit card and car loan offers sent to our discharged bankruptcy clients. Now you may not be able to get a loan or credit card on the terms you desire, but it is entirely possible to begin the process of reestablishing credit after bankruptcy at a higher initial cost for the credit.
Oddly enough, most people who file a Chapter 7 Bankruptcy may have a much easier time reestablishing credit than people who have filed for Chapter 13 Bankruptcy. The main reason seems to be that a Chapter 13 Bankruptcy lasts from 3 to 5 years before you can obtain a discharge, and any new credit while you’re in a Chapter 13 bankruptcy is subject to approval by the Chapter 13 Trustee. That being said, the good part is that your timely payments to the trustee as well as any payments directly to your other creditors are reflected in your credit report as being paid on time.
So, if you’ve filed or are going to file for a Chapter 7 or Chapter 13 bankruptcy in Texas you probably want to know what rules you can follow to begin to reestablish good credit after your bankruptcy case has been discharged. Well the answer is that there are no rules. Everyone’s situation is different, so it really depends on what resources you have available to you after bankruptcy and what price you are willing to pay for new credit. For example, if days after you receive your Bankruptcy Discharge you also receive a letter of approval from a car dealership willing to finance you at a 25% interest rate, and you need a car and can afford it, then you can start establishing new credit immediately. Keep in mind we don’t recommend overextending yourself or jumping right back into debt at a 25% interest rate for the sole purpose of reestablishing credit after bankruptcy. We believe that reestablishing credit after you have filed for bankruptcy is a gradual process that takes a little time and a number of responsible choices. It’s really about good decisions and learning from your previous financial mistakes. Be responsible about interest rates and what types of credit you apply for. Don’t jump at every offer that comes your way.
If you are fortunate enough to have a high income or have significantly reduced or eliminated your debts in bankruptcy, and will no longer be living pay check to paycheck, you will have an edge. What’s the edge? Simply put its disposable income. Obviously the more money you make and the more disposable income you have after a bankruptcy will make it easier to reestablish credit after bankruptcy. If you were fortunate to keep your home through bankruptcy, paying your mortgage timely will improve your credit score straight away. Likewise, if you were able to keep your car through bankruptcy, paying your car payment on time will also improve your credit score. Even if you don’t have a significant disposable income after bankruptcy but are now debt free there are other things that you can do to reestablish credit.
These following can help to put you back on track and back in control of your financial future.
- Update Your Credit Report
- Open a Savings Account
- Apply for a Secured Credit Card
- Live within your means
- Don’t Incur Any Additional Debts
The sooner you start to the process of using good financial habits, the quicker you will recover financially, and obtain good credit once again. Whatever you do, remember that there is life after bankruptcy.
If you are one of the many people in Houston, Dallas, Austin, and San Antonio, considering filing for Chapter 7 or Chapter 13 bankruptcy we congratulate you on taking the first step towards gaining control of your financial life and getting a fresh financial start. Likewise, if you have had to file for Chapter 7 or Chapter 13 bankruptcy and received your discharge we hope you will make responsible choices to reestablish credit and take advantage of your fresh financial start.
Wherever you live in Texas, whether it’s Austin, Houston, San Antonio, Dallas, San Marcos, New Braunfels, Waco, Victoria, or any other place in Texas, contact the Texas Bankruptcy Attorneys at The Law Offices Of R.J.Atkinson for a free initial consultation to see if we can help you eliminate, reduce, or reorganize your debt.
There is Life After Bankruptcy… Get a Fresh Financial Start…