OBTAINING CREDIT AFTER BANKRUPTCY

Consumers who are concerned about obtaining new credit following bankruptcy should know that there are many creditors who grant credit to recent bankruptcy debtors. In some cases these days, new offers of credit are made even before the debtor's existing case is completed.

While bankruptcy will remain on a consumer's credit record for ten years, that notation is often not as big a problem as unpaid and undischarged debts. Consumers should also know that they will need to make a special effort to shop for credit following bankruptcy. They should not simply assume that they will have to pay a higher interest rate or offer significant collateral. Without careful credit shopping, recent debtors can be easy marks for predatory lenders.

Market rates secured creditors will typically consider a former debtor eligible for a mortgage or car loan after one or two years as long as there is a good current income stream. Unsecured creditors also increasingly provide credit as early as six months after the bankruptcy at reasonable rates. The lending market is now so competitive, that lenders want recent bankruptcy as borrowers. They have the security of knowing that no new Chapter 7 discharge can be entered for at least six years.

In addition, there are approximately 800 banks in the United States that offer secured credit cards. Many of these cards are a competitive interest rates.

Filing bankruptcy is not the end of the road in obtaining credit, it may mean that you may have to take a different road in order to obtain this credit.