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How Does Chapter 13 Bankruptcy Affect Your Credit?
Being in debt can be crippling, and your last resort might be to file for Chapter 13 bankruptcy to help you get relief from the burden. However, you might be worried about the impact of filing on your credit score. The record will show on your credit history for seven years after you file for bankruptcy.
This may seem like a long time, but it’s shorter than the Chapter 7 bankruptcy timeframe, which is 10 years. The record can make you ineligible for new lines of credit until that period is over. If you’re in a dilemma concerning filing Chapter 13 bankruptcy, consult skilled West Virginia bankruptcy lawyers. They can evaluate your case and advise you on the available legal options.
Chapter 13 Can Help You Reorganize Your Finances
When you file for Chapter 7 bankruptcy, you must liquidate your assets to pay off some of the debt. On the contrary, Chapter 13 bankruptcy gives you room to reorganize your finances. Depending on your circumstances, you can create a repayment plan to pay off your creditors over several months or years.
Repaying your debt is a show of commitment. It makes lenders more lenient and less hesitant to offer you a loan. Chapter 13 doesn’t dramatically affect your credit score, but that depends on the score before you file. If you have a high credit score, you can expect it to go lower after the bankruptcy shows on your credit report.
If you wish to apply for new lines of credit while filing for Chapter 13 bankruptcy or after, you may need to work with experienced Chapter 13 bankruptcy lawyers in Martinsburg. They can look at your case and help you weigh your options.
What Can I Expect When Applying for New Lines of Credit After Chapter 13 Bankruptcy?
While you may be able to apply for new lines of credit after Chapter 13 bankruptcy, the loans may be at different terms than before. If a lender agrees to grant you a loan, they may do so at higher interest rates.
However, your interest rates should decrease as you continue repaying your debts over time and your credit score improves. Talk to your Chapter 13 bankruptcy lawyers in Martinsburg and Charleston, WV, to evaluate your options and understand what could happen after filing for bankruptcy.
How Can I Rebuild My Credit Score After Filing Chapter 13 Bankruptcy?
You can still overcome the credit damage despite being overwhelmed with debt and having a poor credit score. Martinsburg Chapter 13 bankruptcy attorneys recommend the following strategies to help you rebuild your credit score after a bankruptcy.
Analyze Your Credit Report
You can only repair your credit report if you know what you’re fixing, so you should familiarize yourself with it first. Having a clear picture of what makes up your credit score can enable you to plan on making targeted repayments and improvements. You can also quickly spot errors that affect your score, such as faulty public records and incorrect account information.
Honor Payments on Non-Bankruptcy Accounts
While bankruptcy cancels much of your debt, some accounts remain untouched, such as student loans, child support, and alimony payments. A crucial step to repairing your credit score is ensuring you make payments on these accounts promptly and in full. Consistent payments are crucial to building good credit and lowering your credit utilization ratio.
Reduce Your Credit Card Use
You need to avoid the same habits that led to financial trouble to reduce the risk of relapsing. One of the things you can do is reduce your credit card use or avoid it altogether. Credit cards increase your temptation to spend and the risk of being overwhelmed by debt.
However, if you can’t keep off credit cards, bankruptcy lawyers in West Virginia recommend strategically using secured credit cards. These can help you start your journey of repairing your creditworthiness in the eyes of lenders. A secure credit card requires that you make a refundable security deposit and borrow against it.
While the cards come with high-interest rates, they can be an excellent option to show responsible credit behavior if the lenders report your spending to all credit bureaus. Eventually, you can better qualify for a traditional card with more competitive terms.
Make Use of a Co-Signer
You could use a co-signer if you don’t qualify for a loan or rent agreement because of Chapter 13 bankruptcy. If you fail to honor your promise as the principal borrower, the person agrees to repay the loan. However, the co-signer has no rights to the loan funds or financed property but will be liable if you miss payments or default.
How Long Does It Take to Rebuild My Credit Score?
The process of rebuilding your credit score isn’t instant unless you clear your debt immediately and report to the credit bureaus to have them review your score and rating. It can take time and can be frustrating.
However, how long the process takes depends on how intentional you are to pay off your debts and improve your credit score. It would also help to work with an experienced Chapter 13 attorney in Hagerstown, Martinsburg and Charleston to ensure you take the proper steps to avoid getting deeper into debt.
An Experienced Bankruptcy Attorney Helping You Rebuild Your Credit
Filing for bankruptcy can be stressful because it can hurt your credit score. The good thing is that bankruptcy gives you a fresh start to improve your scores, depending on how you handle debt in the future. Consult skilled bankruptcy attorneys in West Virginia if you’re concerned about the impact of bankruptcy on your creditworthiness and how to work around it.
Hinkle Law, PLLC has a team of skilled Chapter 13 bankruptcy attorneys to tell you everything you need to know about the process. We can evaluate your case and advise you on your rights and what you can do to rebuild your credit score. Call us at (304) 592-4609 to schedule a FREE case assessment.
