With so many people in debt today, bankruptcies have become very commonplace, with Chapter 7 being the most common.
Chapter 7 bankruptcies make up a vast majority of the consumer bankruptcies because they are relatively quick when compared to other bankruptcy cases. Chapter 7 cases can go from being filed to having debts discharged within a period of three to six months.
While bankruptcy can be a helpful tool for those who find themselves overburdened by debt, there are a lot of families that choose to not file because they are afraid of what the outcome will be for their credit scores.
While the fear of a damaged credit score is a fair one, the truth remains that leaving your large amounts of debt unpaid will do more damage to a credit score, as well as your financial future than filing for Chapter 7 bankruptcy would do.
Rebuilding your credit post bankruptcy (Chapter 7)
After filing a Chapter 7 bankruptcy it will stay on your credit report for 10 years. However, the simple fact that it is on your credit report does not mean you will not be able to build new credit and move on from your poor financial past.
There is a long history of debtors being offered credit cards not long after they receive their discharge. However, not all of these offers are a good way to boost your credit score because a lot of these cards will come with high interest rates, but low limits. So, it is important to carefully review these offers before getting involved.
The best option: Your best option for rebuilding your credit post-Chapter 7
Bankruptcy is with a secured credit card offered by your financial institute. A secured credit card is one that is backed by a payment that is used as collateral. This type of card is an easy and safe way for you to work on rebuilding your credit without running into problems with high interest rates, as well as other annual fees.
This post was written by Trey Wright, a bankruptcy attorney in Tallahassee, FL. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigat.