Credit reportWill a bankruptcy filing hurt my credit?  This is a question I hear during nearly all of my first conversations with potential new clients.  If you’re considering bankruptcy, then your credit is probably already suffering from delinquencies or soon will be.  Filing bankruptcy shows that you’ve taken responsibility for and resolved your negative debt issues.

I recommend pulling your credit report three months or so after the Chapter 7 discharge date to make sure that all debts included in the bankruptcy are correctly reported as discharged with a zero balance.  If you find items that that are not reported correctly, you should lodge disputes with the credit reporting agencies.  Otherwise, you are not receiving the full benefit of the Chapter 7 fresh start.

Rebuilding your credit after a bankruptcy filing is crucial to a full credit recovery.  While you may understandably feel like you never want to see another credit card again, incurring new debt and making timely payments is an essential part of the process.  Plus, the credit card accounts you had prior to the bankruptcy filing will be closed and you’ll want a credit card for emergencies, rental cars, etc.  If you don’t immediately qualify for a regular credit card, I suggest a secured credit card where you put money down as collateral for the charges incurred.  Also, retail store credit cards typically offer easier credit approval.

After establishing a timely payment history on credit accounts, you should be able to qualify for financing at favorable interest rates.  Try to avoid incurring new debt that involves high interest rates and excessive fees immediately following your bankruptcy.  Although you will probably receive many offers for this kind of financing, even before your bankruptcy discharge goes through, you don’t want to find yourself struggling financially all over again.

While a Chapter 7 bankruptcy filing is reported on your credit for a ten year period, if you’re diligent about rebuilding your credit then bankruptcy should benefit you in the long run.  Once you’re out of the cycle of trying to make debt payments that you can’t afford, prospective lenders begin to view you as less of a risk.  In fact, it’s possible to qualify for a mortgage with a decent interest rate as little as two years after your bankruptcy discharge is entered, depending on your financial situation and lender underwriting policies.

I personally file bankruptcies for residents of Pinal, Pima, and Yuma counties.  If you live in San Tan Valley, Florence, Maricopa, Casa Grande, Apache Junction, Coolidge, Eloy, Kearny, Superior, Picacho, Red Rock, Mammoth, Casa Blanca, Pinal City, Cactus Forest, Tiger, Sasco, Cochran, Stotonic Village, or American Flag, I would love to meet with you in our Tempe office or speak with you by phone.  If you live in Tucson, Marana, Oro Valley, Sahuarita, Arivaca Junction, South Tucson, Ventana, Summerhaven, Willow Canyon, Ali Chukson, Anegam, Ali Molina, Haivana Nakya, Charco, Total Wreck, Nelson, Childs, or Ali Oidak, I would love to meet with you in our Tucson office or speak with you by phone.  If you live in Yuma, San Luis, Somerton, Wellton, Dateland, Castle Dome Landing, Roll, or Dome, it would be my pleasure to represent you in a bankruptcy and I will personally attend your meeting of creditors.

Of course, I am talking about Arizona law, this general information may not be right for your specific matter, and is not legal advice.  Please feel free to either call me at 480-344-0981 or send an email to tperez@davismiles.com.  As a friendly reminder, the information I’ve shared in this post is not intended to constitute legal advice or create an attorney-client relationship.

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