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Credit After Bankruptcy? How Will Bankruptcy Affect Getting Credit

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Credit After Bankruptcy? How Will Bankruptcy Affect Getting Credit

Most people think that filing for a bankruptcy will destroy any chance of them ever buying a car, buying a home, or obtaining credit for any other purposes again. This is absolutely not true. There are two very important reasons why you will be able to obtain credit again. The first reason is that you will have more disposable monthly income once you obtain your discharge in bankruptcy (usually 90 days after filing bankruptcy), and the second reason is that you cannot file for another Chapter 7 Bankruptcy for 8 more years, thus you are a better risk to creditors, because you will be unable to run away from any new debt for the next 8 years.

It is quite simple why filing for a bankruptcy gives you more disposable monthly income. Many people who are about to file for a bankruptcy possess multiple credit cards with combined debt balances ranging from $20,000- $100,000. The minimum monthly payment on these cards usually ranges from $750-$4,000/month. Once you file for a Chapter 7 Bankruptcy, you no longer are obligated to pay those minimum credit card payments, thus you have $750-$4,000 additional spending money each month. This additional income makes you more likely to make any future debt payments due to the fact that you have more disposable income without those previous commitments; therefore you are a better candidate to receive credit.

If you file for a Chapter 7 (Clean Slate) Bankruptcy, you are unable to file another Chapter 7 Bankruptcy for 8 more years. This means that if you accrue anymore debt and you default on your payments, you will have no choice but to pay it back. This makes you a better risk to creditors. Most creditors will lend to someone even only months after their bankruptcy for this very reason. If you cannot file another bankruptcy you will be forced to pay off any debt you accrue in the future, and if you do not you will face garnishments, bank levies, and lawsuits. Therefore, since you no longer have the option to file another bankruptcy for 8 more years, you are in fact a better risk to creditors in the future.

Due to the fact that after filing a bankruptcy you will have more disposable monthly income as mentioned above, combined with the fact that you lose the option to file another bankruptcy for 8 years and are now a better risk to creditors, these creditors will extend you credit. Most car dealerships will allow you to finance a car a day after you get you discharge. This is because you have more money to pay the car payment. Plus if you default on the car payment and the bank repossesses the car, the bank is essentially taking back the security interest in that secured debt (car payment). Once the security interest (car) has been repossessed that difference between the Principal balance you owed on the car payment, and the amount the car sold for at auction (deficiency balance), is actually a unsecured debt. If you filed for a Chapter 7 Bankruptcy, the unsecured deficiency balance debt would be wiped out (discharged), thus if you had already filed for a bankruptcy and you no longer had the ability to do so, you would be a better risk to automobile finance departments, due to the fact that you could no longer wipe out a deficiency balance on a repossession.

Our team of attorneys and trained paralegals have the experience to analyze your financial situation and guide you through the process of whether to file for a bankruptcy. Call today to set up a FREE consultation to see if you qualify for a chapter 7 Bankruptcy.


See What Our Clients Have To Say

Yelp Review

Roger C.

I reached out to BLC to help assist with a chapter 7 business bankruptcy and they provided excellent guidance, advice, and support through the entire process. In my case an adversarial action was filed by one of the creditors and attorney Ahren Tiller and his staff provided sound ...arguments which prevailed. Couldn’t have found a more experienced and supportive team to represent me in a tricky situation. I would highly recommend them to anyone making the difficult but sometime necessary decision to find financial relief. Read more
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Justin R.

Like many others before and during the pandemic, life happenings caused me to be in a financial situation to warrant bankruptcy. The BLC was super professional all the way through the entire process. Right after I paid for my Bankruptcy, I got sick and had to have surgery and recovery. Then we ...were in full Pandemic mode. They were gracious to delay my filing until I was recovered and ready to file. I could not ask for more. The process was over all quick and painless for a simple Bankruptcy like mine. I feel a weight has been lifted and I can rebuild. Thank you for all your arduous work and patience, Gabriel, Ahren, and their teams are knowledgeable and efficient. Read more
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Katey Huntley

Responsive, friendly, kind, extremely easy to work with! So knowledgeable and made this entire process painless. Very grateful!

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Lynn Molina

Gabriel Hanna, Esq and the staff at BLC helped me in a very difficult time. I appreciate all the help and care they gave my case.

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Linda Cramer

I can’t say enough of how much this bankruptcy law firm helped me with my financial situation. They were all so helpful, efficient and made the difficult time and process as quick and easy as possible. I would recommend them to anyone I know and am glad to give my public recommendation as well. T...hey truly deserve a five star plus rating. Read more
Yelp Review

Andrea N.

I am very happy with my experience with BLC. Bankruptcy is not something anyone wants to go through, however everyone at BLC made my experience pleasant and easy. The process was explained thoroughly and I had an easy time reaching out and connecting with my attorney. Anika Renaud-Kim was my attorney ...and she was nothing short of amazing! She was very patient and generous with her time. Ms. Renaud-Kim definitely made me feel at ease and comfortable through the entire process. Read more
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Lidia Paramore

they did a great job for me, helped me anytime I needed something, my Lawyer Gabriel Hanna is the best, gave lots of confidence all the time..thanks BLC I will.always recommend you, I’m very grateful for your service!!!

Yelp Review

Rachael C.

When searching for information I had called a few different firms and received consults. BLC was the only one who didn’t shy away and provided answers and information during the consult. Once I agreed to move forward, they were supportive, informative, and eased my anxiety through the whole process.... I can’t recommend them enough. Read more
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Emily Martinez

AmazingI had many questions and uncertainties and the carefully explained it all and made it easy to understand. They facilitated a fast and easy process making this scary difficult thing simple

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Legal Disclaimer: The Bankruptcy Law Center is a California Licensed law firm with attorneys licensed in the state of CA, NY. Attorney Ahren Tiller is responsible for this advertisement. Bankruptcy Law Center’s principal office is located at 1230 Columbia st. Suite 850 San Diego, CA 92101. Prior results listed on this site do not depict or in any way infer a prediction or outcome.We are a debt relief agency proudly providing options to people with financial problems. View our Privacy Policy

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