
Filing bankruptcy can relieve the anxiety and stress you feel regarding the debt that you’re in, as you can receive relief from both debt and creditor contact. Unfortunately, you may find that you are unprepared for the challenges that can follow bankruptcy. If you’re struggling to rebuild credit after your case has been finalized, you’ll want to keep reading. The following blog explores the impact this can have on your credit, what you can do to help improve your circumstances, and the importance of working with an Orange County consumer bankruptcy lawyer.
How Will Bankruptcy Impact My Credit Score?
When you file for bankruptcy, the biggest disadvantage it can have is that it will drastically impact your credit. Your score can plummet after filing, as those with a score of around 680 typically drop between 130-150 points, while those with a 780 can lose up to 240 points.
Aside from the drastic decrease in your credit score, the filing will appear on your report. As such, lenders are unlikely to approve your applications, especially if the process is ongoing, as they may be worried the debt will be discharged when your case closes. However, bankruptcy can appear on your credit report for ten years if you file Chapter 7 and seven years if you file Chapter 13, meaning creditors will see this and potentially deny your application as a result.
What Can I Do to Rebuild My Credit?
One of the most important things you can do to help rebuild your credit is to start budgeting. Ensuring you keep your spending to a minimum is critical to preventing the accumulation of more debt. Making purchases that you cannot afford to pay immediately or running up the charges on credit cards with the intention of paying them off later can thrust you back into the debt cycle, impeding your ability to rebuild credit. You should always try to pay your bill in full to prevent the accumulation of interest.
Another step you can take is to open a new account to help build up your credit. For example, you can open a secured credit card, which gives you a monthly limit based on a deposit you’ve put down. This can help you rebuild your credit, especially as you may have a hard time being approved for loans or cards after filing.
Finally, you should ensure you make your payments on time. Not only can this help your credit, but it also shows future creditors that you are trustworthy and have taken the necessary steps to rebuild your credit following bankruptcy. If possible, you should make payments before the due date. You may even want to set up automatic payments to ensure your bills are paid on time, if not early.
Connecting with a bankruptcy attorney is critical if you’re ready to begin this process. Filing under the guidance of the team at the Law Offices of Michael D. Pinsky can not only help ensure you take the correct steps, but we can also provide additional advice on how to rebuild credit for your specific circumstances. When you need help, reach out to our dedicated team today.