Rebuilding Your Credit After Bankruptcy
This idea that bankruptcy requires turning over all of your property is a myth, particularly in Chapter 13 cases. If you are considering bankruptcy and need someone to help you separate the myths from the facts, contact an experienced bankruptcy attorney.
A Michigan Chapter 13 Bankruptcy Law Firm
Local Debt Relief Attorneys
The Law Office of Babut Law Offices, PLLC is committed to helping people throughout Southeastern Michigan achieve financial stability through Chapter 13 Bankruptcy. We understand the importance of local representation when filing for Chapter 13 bankruptcy and we have offices located in Ypsilanti, Taylor, Jackson, and Adrian to meet the needs of our clients.
Having handled more than 10,000 bankruptcy cases over fifteen years, our attorneys have the skill and knowledge to assure that payment plans worked out through the bankruptcy court place our clients on the road to financial recovery.
Contact our Michigan Chapter 13 Bankruptcy Attorneys
If you are experiencing financial hardship and need the legal advice and representation of an experienced Chapter 13 lawyer, please contact the Law Office of Babut Law Offices, PLLC. Our firm has offices in Ypsilanti, Taylor, Jackson, and Adrian to meet the needs of clients throughout Southeastern Michigan, including Wayne, Washtenaw, Lenawee, Jackson, Hillsdale, Calhoun, and Livingston Counties and the Down River area. Some of the cities we routinely serve include Ann Arbor, Hillsdale, Saline, Romulus, Flat Rock, Taylor, Southgate, Wyandotte, Lincoln Park and Allen Park and surrounding areas.
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Rebuilding Your Credit After Bankruptcy
Bankruptcy has a long-lasting impact on a person's credit rating, and on his or her ability to obtain credit in the future. The impact is not entirely negative. In some cases, filing bankruptcy may actually improve a bad credit rating. In addition, there are a number of steps a person can take to improve his or her credit after bankruptcy. An experienced bankruptcy attorney at Babut Law Offices, PLLC in Ypsilanti, MI, can offer valuable advice about how credit can be improved after a bankruptcy, and how to work for a better financial future.
Discharge Results in an Improved Debt-to-Income Ratio
Most of the debtors who consider filing bankruptcy already have poor credit histories. Their credit ratings have suffered because of slow payments, late payments, repossessions, extended credit, charge-offs, foreclosures or judgments. After their bankruptcy, however, the discharged debts will no longer count against their income, so their credit may be better after the discharge than it was before. In addition, while a bankruptcy case will remain on an individual's credit report for up to ten years; late payments stay on for up to seven years, so the effects are similar. Bankruptcy, however, gives consumers a chance to improve their credit faster because they will have an improved debt-to-income ratio after discharge.
Using Credit Cards Wisely
In some cases, individuals may be able to keep one of their credit cards even after bankruptcy. They may retain a card that they already have but that has no debt on it, or they may reaffirm a debt on a card, which means that they sign a contract with the credit card company after filing bankruptcy that says the debt will be paid anyway if the holder is allowed to keep the card. Some companies are willing to agree to this arrangement because they will be paid for the debt, whereas without reaffirming the entire debt could be discharged in the bankruptcy proceeding.
A secured credit card is another option for rebuilding credit after a bankruptcy. A secured credit card is issued by a bank, and is backed up by money that is kept on deposit with the bank that issued the card. The bank account is the security for the card. If the bill for the credit card is not paid on time, the bank may use the money in the account to cover the payment. The limit on the card can be increased by increasing the balance in the linked bank account. The issuers of secured credit cards report about their customers to the credit bureaus, just like the issuers of other credit cards, so any subsequent positive payment history will be available to future creditors. The interest rates for secured credit cards are often higher than the rates for non-secured cards, but they still can be worth the extra cost by virtue of the redeeming value of the new and reported financial stability.
Co-signed Loans
Still another way to re-establish credit after a bankruptcy is to obtain a loan with a co-signor whose positive credit convinces the bank or other lender that the loan is a safe bet. As payments are made on the cosigned loan, the positive credit history affects both borrowers.
"Credit-Repair" Services
One "credit repair" method to avoid after bankruptcy is seeking help from an unscrupulous "credit-repair service." Many consumers pay substantial sums of money to so-called "credit clinics" to "fix" their credit reports when, in actuality, only time can improve bad credit. A credit repair service or clinic can legally do nothing that a consumer cannot do on his or her own, for free. Some credit-repair companies actually encourage consumers to commit fraud by attempting to create a second identity. The Federal Trade Commission has investigated these often-fraudulent services and warns consumers to be wary of promises that seem shady or too good to be true.
Speak to a Bankruptcy Lawyer
In order to make the most of a bad situation, debtors must learn from bankruptcy and demonstrate greater financial responsibility in the future. A lawyer experienced in bankruptcy law at Babut Law Offices, PLLC in Ypsilanti,MI, is in a strong position to advise consumers not only before and during the bankruptcy process, but also after, guiding them through the necessary steps to improve their credit ratings and avoid future financial catastrophes.
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