Personal Bankruptcy - Can you get credit afterwards?

Filing for bankruptcy is often traumatic; it's the result of months or years of an inability to repay bills adequately and it is generally the final option of consumers who are in over their heads financially. In debt relief in court, the courts will frequently wipe clean all debts and obligations, excepting student loans, child support, spousal support and back taxes. After debt relief in court, you are liberated from your heap of financial obligations, but you are additionally, unfortunately, short of available credit.

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A lack of credit after a bankruptcy filing can trigger a lot of problems. If you need a telephone, the phone company will want to examine your credit record. Landlords want to rent to people who can pay their bills, so you can expect a credit check if you want to rent an apartment. If you seek a job, your employer will evaluate your credit report.

If you no longer have acceptable credit, you have to create credit from scratch. Building a new credit record will not be simple or quick, but it can be done and it is not overly hard.

Many people who leave bankruptcy court are astonished to notice that the credit card issuers market credit cards to bankrupt people. Credit card offers to the freshly broke are not a good deal, but if you accept, and make little and regular purchases and pay your bills every month and promptly, you can slowly but surely rebuild that damaged FICO score. Marketing credit cards to individuals who are recently out of debt relief court may strike you as odd, but the credit card companies' reasons are sound ones. The rate of interest offered will almost certainly be in the neighborhood of 30% annually, your credit limit will probably be fairly small, and the annual fee will certainly be very steep. Once you get out of court, you cannot have your financial obligations wiped out again for eight years, so anything you buy during that time must be paid in full.

It is possible to speed up the process somewhat if you know someone with healthy credit who will be able to set you up as an authorized user on one of his credit card accounts. As long as the cardholder pays their bills regularly and promptly, you will benefit. The disadvantage, of course, is that you could be harmed if your friend or relative who owns the account fails to pay it. All they need to do is add your name to the credit card account. You do not have to use the account and you don't have to pay the bills. Just having your name on the credit card account will help you rebuild your FICO ranking.

Repairing your credit report may be a tedious, drawn-out process, but it is very essential to ensure that your credit record is correct. Get a copy of your credit record and be certain that your debts are noted as discharged. If your report shows your previous debts as current, you should cleanup your credit record by contacting the three credit bureaus and informing them that your debts have been discharged.

Fixing credit is a tough task and it may seem to be daunting to anyone who is coming out of court. The time expended rebuilding credit is well worth it, as you will see benefits for years to come.