There is life after bankruptcy.
The reason a bank or store is willing to give you credit is because they believe you will pay them back. If you pay back what you owe, they make money both on the markup on the goods sold and on the finance charges.
It has often been said that someone coming out of bankruptcy is a good credit risk, because, after all, they do not owe anyone any money!
This is not to suggest that you should dive back into credit cards. In fact, you will learn to live without them for a long time during and after your case and you should use what you learn to keep out of financial trouble in the future.
There are many companies that will offer you credit right after bankruptcy, but you should be careful before you take it. The terms may include high fees, high interest and other hidden charges. Be careful and compare offers.
My recommendation for establishing credit after bankruptcy is to save. When you can show a creditor, such as a mortgage bank, that you can put part of your earnings into the bank each week, they will see that you have the money necessary to support a mortgage or a car loan.
After you have saved some money, you might want to get a secured credit card. For a secured card, you would deposit some money in the bank and they would give you a card based on that deposit. Some banks will give you a card equal to your deposit, some will give you a larger credit line. After you have established that you pay your bills on time, you may get increases for new deposits larger than the new deposit.
Be careful with secured cards, though. Some have high fees - you might send them $200.00 and they will give you a card for $100.00, keeping the rest. You should be able to find a no-fee secured card. Shop around. You may want to put your savings into a major bank that issues credit cards because you may get a better deal, or even an unsecured card, from your own bank.
Be careful in applying for new credit. If you apply for many cards, each application will show up on your credit report. Having many applications on your report is not good.
Surprisingly, it is not hard to get a mortgage after bankruptcy, especially if you have a large down payment. That is where the savings comes in. If you can put 25 percent down, you should have little trouble getting a mortgage. Again, be careful. Try going to a bank first before you deal with mortgage brokers.
Yes, there is life after bankruptcy. Especially if you can save money each week.
Free consultations • Conveniently located in Forest Hills near highways and several major bus and subway lines
Allan R. Bloomfield
Attorney at Law
118-21 Queens Blvd. Suite 616
Forest Hills, NY 11375
Phone: 718-544-0500 | Email
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Allan R. Bloomfield represents clients in Chapter 7, Chapter 13, and consumer protection cases in Queens County and New York County, including Queens, Brooklyn, Manhattan, the Bronx, and New York, NY.