Repairing Your Credit After Filing for Bankruptcy
Dec. 6, 2022
Facing bankruptcy can be one of the most difficult experiences in a person’s life. After filing for bankruptcy, it can be just as stressful to follow the correct path toward repairing your credit. However, being informed about your options helps you reduce stress and take a proactive approach to build your credit.
At the Cannon Law Offices, PLLC, we are focused on helping repair your credit after filing for bankruptcy in North Carolina. We have the practice, skill, and resources to help you develop a plan before or after filing for bankruptcy, that way you're prepared to take the necessary steps to repair your credit. Our team proudly serves clients in Greenville, Outer Banks, Wilmington, Hyde County, and Washington County, North Carolina.
How Long Does a Bankruptcy Stay on Your Credit Report?
Filing for bankruptcy affects your credit report at major credit bureaus such as Equifax, Experian, and Transunion. However, bankruptcy does not stay on your credit record forever. Here is how long a bankruptcy stays on your record in Greenville, North Carolina.
Chapter 7 bankruptcy stays on your record for up to 10 years. Chapter 7 is used to discharge eligible debts such as unsecured liabilities, including credit cards or personal loans. Small business owners and entrepreneurs often use this type of bankruptcy.
Chapter 13 bankruptcy stays on your record for up to 7 years. This bankruptcy type is known as the “wage earner’s plan.” Debtors can use this bankruptcy type to restructure their debts as far as their income allows them.
Does that Mean I Can’t Do Anything Requiring Credit for 7-10 Years?
You can still file for mortgages and car loans shortly after filing for chapter 7 or 13 bankruptcy.
In some instances, you may apply for a mortgage one or two years after filing a chapter 13 bankruptcy. You can also apply for a car loan within six months of a chapter 13 filing. Please note that applying for credit is possible since chapter 13 allows you to restructure your debt. Depending on your specific circumstances (i.e., involuntary job loss leading to debt issues), lenders may consider your applications, especially if your credit score is still in the 550 to 600 range.
Additionally, purchasing a car after four months of a chapter 7 discharge is possible. You can apply for a mortgage within two to four years following chapter 7 bankruptcy. In this situation, lenders analyze your circumstances, credit score, and history to decide your application.
It is recommended that you talk to lenders about your situation. Being transparent with lenders in Greenville, North Carolina, enables you to determine your eligibility for loans and mortgages. A knowledgeable attorney can help you get in touch and walk you through the process.
Please note that if you do qualify, you may need to provide collateral and get a higher interest rate.
What Steps Can I Take to Rebuild Credit?
Please keep in mind that filing for bankruptcy is not a death sentence. You can proactively approach rebuilding your credit to improve your overall credit score. You don’t need to wait five, seven, or ten years to rebuild your credit score. You can do so with the following steps:
Avoid falling behind on any remaining debts. For instance, try your best to stay current on your mortgage to ensure your credit report does not take any additional hits.
Above all, please avoid making late payments on your remaining debts. Late payments can drag your score down almost instantly.
You can apply for a secured credit card. This type of card allows you to rebuild your credit easily. You need to pay a deposit to secure the card (generally about $500). From there, staying current on your payments can help rebuild your credit within four to six months.
You can apply to have your bankruptcy removed from your credit report early. Contact the credit bureaus a couple of years early to ask if they can remove the bankruptcy filing from your record.
Paying your bills on time (electricity, heating, cable, phone) can help rebuild your credit. Nevertheless, late payments can negatively affect your credit report. A good rule of thumb is to pay one or two days before your due date to avoid getting a late payment on your credit report.
Please note that consulting with a bankruptcy attorney is a great way to help you weigh your options. A bankruptcy attorney may be able to help you negotiate with creditors so you can avoid filing for chapter 7 or 13 bankruptcy.
If you’ve already filed, a bankruptcy attorney can help you weigh your options so you can rebuild your credit as fast as possible.
Finding the Right Bankruptcy Attorney in North Carolina
At the Cannon Law Offices, PLLC, we strive to help our clients rebuild their credit following a bankruptcy filing. We stop at nothing to give our clients the support they need to make informed decisions about their credit history. Our legal team has the skills, knowledge, and experience to help you get your credit report back on track.
Don’t hesitate to get in touch with us today to find out more about your options. Our legal team is standing by to talk your call. We proudly serve clients in Greenville, Outer Banks, Wilmington, Hyde County, and Washington County, North Carolina.