Bankruptcy Myths: Part Two – I’ll Never Be Able to Get Credit Again
I’ve worked with hundreds of clients who have filed bankruptcy in Flint, MI, Detroit, MI and Bay City, Michigan. In each of those cases, there have been several reoccurring concerns that I have addressed. Over the next few weeks, this blog will discuss common myths about filing for bankruptcy – such as losing all of your assets and not being able to get credit again. Continue reading to discover what really happens if you file for bankruptcy.
Bankruptcy information is public record. Electronic filing of court documents allows data brokerage firms to quickly find your information. They then sell the info to credit card companies that want to market their products to people who need credit and think they can’t avoid incredibly high interest rates. Make sure you carefully review any offers that you receive. Many of these cards will charge an annual fee and most of them will have very high interest rates.
In addition, bankruptcy will show under the public record section of your credit report for up to 10 years. There is no quick fix for a bad credit report. It takes time to rebuild your credit. Many of my clients begin receiving car loan and credit card offers before they’re finished with their bankruptcy proceedings. Making the right credit choices will help you rebuild your credit within 2-3 of filing.
What’s the Best Way to Rebuild Credit After Bankruptcy?
I recommend meeting with your local credit union or bank to work on starting to rebuild your credit. Starting with a secured credit card is the best option if you can’t get approved for a reasonable interest rate. A secured card is where you gave the bank cash as collateral for your credit limit. Then, use your card for small purchases every month. Finally, make sure you pay in full and on time each month to avoid interest charges.
You’ll start to get credit card offers as you begin to build your credit history and improve your score. Beware of any offers, especially for cashback cards, while your score is below 650. These cards typically provide little value and can smack you with high interest rates. Once you get your credit score above 680, the good credit card offers will start rolling in. Then you can have your pick of the top-tier reward credit cards and start using your regular spending to get cashback or rack up points for travel.
This blog is part of a multi-part series. Start reading at Bankruptcy Myths: Part One – I’ll Lose Everything! Or, check out Bankruptcy Myths: Part Three – All of My Debts Will Be Relieved.