This is a common question that I get as a West Virginia Bankruptcy Attorney. Unfortunately, there are a lot of myths and misinformation about bankruptcy and a lot of that misinformation relates to how bankruptcy affects your ability to get credit. Hopefully this post will help you with some of your concerns.
Myth: You can’t get credit for 7 years after filing a bankruptcy.
This simply is not true. This is a myth about bankruptcy that is popular because a bankruptcy filing will remain on your credit history for period of 7 to 10 years. However, this does not mean that you cannot get credit during that time. There are several factors that go into getting credit (e.g., income) but I have clients who are able to get financing for vehicles immediately after their bankruptcy is discharged in a Chapter 7 and sometimes during their Chapter 13 Bankruptcy. According to most home loan guidelines, you may be eligible for a home loan within 3-5 years after filing.
Why would someone give me credit after filing a Bankruptcy?
It is a surprising fact, but to some lenders you become a better credit risk after filing bankruptcy. For example, if before filing bankruptcy you had $30,000.00 in credit card debt, a lender may not want to give you credit to buy a car. The lender would be worried that you could not afford to make the payments on all of your existing debt plus the new obligation of the car loan. However, after bankruptcy you no longer have the burden of the credit card debt and the lender will be more confident that you can afford the car payments. You most certainly will pay a higher interest rate for the credit but it will give you the ability create a positive credit history.
I always say that bankruptcy shouldn’t be looked at as the end of the road for your finances. It can be clean slate upon which you can rebuild your financial future.
David J. Hinkle
West Virginia Bankruptcy Attorney