For a lot of debtors, the hardest part of filing for bankruptcy is arriving at the decision to do so. When the debtor realizes that it’s going to be too difficult, if not impossible to catch up with all of their payments, penalties, and interest, they finally throw in the towel and decide that bankruptcy is the most practical and realistic solution – a decision that doesn’t come easily for most bankruptcy filers.
One reason why people delay in filing bankruptcy is their credit. They hang on for as long as they can, trying to pay their payments so their credit isn’t ruined. In most cases though, people play this game for too long. They’ll keep paying penalties and interest and usually, they let too much time before they finally file bankruptcy – and by this time their credit has already taken quite a hit.
Usually, debtors have already damaged their credit by the time they get around to filing bankruptcy. And of course, the bankruptcy itself damages credit as well. Chapter 13 stays on a debtor’s credit report for seven years, while Chapter 7 stays on a debtor’s report for 10 years.
Should I Shun Credit Cards?
Even though a bankruptcy can impact a person’s credit report for up to 10 years, that doesn’t mean they will be worse off if they file bankruptcy. In many situations, it’s far easier to rebuild one’s credit after a bankruptcy than if they chose not to file at all.
If you choose to file bankruptcy, you do not want to make the mistake of shunning credit cards or anything that will help you rebuild your credit. You see, even though bankruptcy stays on your credit for 7 to 10 years, you can start rebuilding your credit right away. You do not want to wait until the bankruptcy is no longer reported.
You may want to stay far away from credit cards after bankruptcy, but what you need to do is the opposite; you want to get back on the horse. Some suggestions for rebuilding your credit include:
- Ask a family member to add you as an authorized user without giving you an actual physical card. This will start rebuilding your credit.
- Shop out the available credit cards and get one with no annual fee. Don’t charge more than 10% each month and pay the card off in full each month.
- Get a secured card where you deposit a certain amount of money and can only charge up to the amount you put on the card in advance.
If you have questions about Chapters 7 or 13 bankruptcy and how to rebuild your credit after a bankruptcy, contact our York bankruptcy firm for a free consultation.