How Tempe Residents Can Reestablish Credit After Bankruptcy

How can I reestablish credit after bankruptcy?

If you’ve filed for bankruptcy in Tempe, you should know how Tempe residents can reestablish credit after bankruptcy.

Life after bankruptcy in Arizona doesn’t have to be hard. With the best bankruptcy attorney in Tempe by your side, you can start to rebuild your life and your credit post-bankruptcy without any additional challenges.

Read on below to find the answers to the following questions:

• What comes next in life after bankruptcy in Arizona?
• How does bankruptcy affect my credit?
• Is reestablishing credit after bankruptcy impossible?
• What are the minimum waiting periods to reestablish credit?
• How do I rebuild my credit?

What Comes Next: What to Expect in Life After Bankruptcy in Arizona

Now that you’ve officially filed for bankruptcy with a Tempe bankruptcy lawyer by your side, you’re probably feeling relieved. You can finally breathe again. No more calls from collection agencies or credit card companies. You’re finally free!

And now you’re ready to take the next step: rebuilding your credit.

What You Can Expect Now:

Your debts have been discharged and you can now start fresh. However, keep an eye out for these things:

• You’ll probably be flooded with “low-balance credit card” offers from creditors, suggesting you rebuild your credit using their cards. In the fine print, you’ll notice large fees (activation fees, annual fees, membership fees, etc.) that could push you to the limit before you have even had a chance to use the card. Then late charges and interest could put you right back in debt. Don’t fall for it! Take your time and research cards before getting a new one.
• You won’t immediately qualify for most car loans and mortgages. However, within 2-3 years after debt discharge, you will most likely qualify again.
• The first loans and credit accounts you get after bankruptcy will most likely have higher interest rates and lower credit limits. This is due to your low credit score. Over time, this will have less of an impact and you can request lower interest rates.

If you’re wanting more specific advice on what to expect and how Tempe residents can reestablish credit after bankruptcy, contact the best bankruptcy attorney in Tempe: Davis Miles McGuire, Gardner. Our dedicated team of Tempe bankruptcy attorneys is ready to assist you through every step of bankruptcy.

How does bankruptcy affect my credit?

It’s essential to understand that your credit score is affected when you file for bankruptcy.

After filing, a bankruptcy can stay on your credit report for up to 10 years.

• Chapter 13 bankruptcy credit report penalty: Lasts seven years from the date of final discharge
• Chapter 7 bankruptcy credit report penalty: Lasts ten years from the date of final discharge

Thankfully, the weight of these penalties decreases as time goes on.

The average credit score after bankruptcy ranges from 530-540.

Here’s how bankruptcy appears on your credit reports

You can expect your credit score to drop after bankruptcy. While your debts are now discharged, the accounts will still show up on your credit report. However, they will be reported as “discharged” or “included in bankruptcy” with a $0 charge. Lenders will see this when looking at your report.

So what’s the impact to your credit score?

Note that having a higher score before bankruptcy means you’re likely to experience a larger impact. If you already have a lower score, there’s not much further for you to fall, meaning you may feel less impact.

No matter your credit score at the start, after filing for bankruptcy you will have a bad credit score. FICO scores cannot go any lower than 300, but it’s pretty rare for them to dip anywhere below 500.

An Arizona bankruptcy lawyer in Tempe can help you better understand how bankruptcy may impact your credit.

Is reestablishing credit after bankruptcy impossible?

Rebuilding your credit after bankruptcy is not impossible – there is hope! Believe it or not, bankruptcy is not a death sentence for your credit score or your future.

Even if your bankruptcy dropped your credit score to 550 or lower, you can recover in as little as 12-18 months!

Tempe residents can reestablish credit after bankruptcy in as little as 12-18 months.

What are the minimum waiting periods to reestablish credit?

After filing for bankruptcy and getting your debts discharged, things change. As we discussed above, getting new lines of credit or applying for loans will become more challenging. However, as time goes on, this will become less and less difficult to achieve.

Note that there are restrictions and minimum waiting periods to reestablish credit in place for things like home loans.

For example, Fannie Mae requires the following after a bankruptcy:

• Chapter 7 or 11 Bankruptcy: A 4-year waiting period is required. However, a 2-year waiting period may be available if extenuating circumstances are documented.
• Chapter 13 Bankruptcy: If dismissed, the waiting period is 4 years fro date of dismissal. If discharged, the waiting period is 2 years from the discharge date.
• More Than 1 Bankruptcy: If you have multiple bankruptcy filings within the past 7 years, a 5-year waiting period is required.

However, it is possible to secure financing for a car or home even a day after you file for bankruptcy. A Tempe bankruptcy lawyer can help you understand what’s possible with your specific bankruptcy case and help you get financing.

How do I rebuild my credit?

Now you’re ready to start reestablishing your credit. Here are some things to keep in mind:

• Don’t jump into new credit cards just yet – Don’t sign up for any new credit cards before doing your research. As previously discussed, you don’t want to end up in the same boat again, with debt you can’t pay. Be careful.
• Download your FREE credit reports – Visit www.annualcreditreport.com and download your credit report from all 3 major agencies. You can download these for free once a year. Look at your score and make sure all discharged debts show a zero balance.
• Dispute any incorrect balances – If any discharged debts don’t show a zero balance or “paid,” dispute those items with each credit agency. Most of them will let you create a dispute online, which is quick and easy.
• Start a budget and stick to it – This is one of the best ways for Tempe residents to start reestablishing credit after bankruptcy. Make sure your budget makes sense for your lifestyle and covers everything you need to keep you out of debt.
• Create an emergency fund – One of the best steps towards reestablishing credit is creating an emergency fund. Each month, you add money to it, like a savings account. You can only use the money in that account for emergencies, like medical problems or urgent home repairs.
• Pay your non-discharged debts on time – If you have debts that weren’t discharged through bankruptcy, you are still responsible for those. Make your payments in full, on time so you can begin rebuilding your credit. Also don’t use over 30% of your available credit limit on any card you may still have.
• Consider a secured credit card – A “secured” credit card requires a small cash deposit in order to use the card. It works