Can I Rebuild My Credit After Filing Bankruptcy in Pennsylvania?
Your credit score reflects your financial habits over the years, taking into account factors such as missed payments, credit utilization, and the length of your credit history. Your credit score is financially important, because it is used by banks and lenders to determine what types of loans and credit cards you qualify for. Having a higher credit score makes it easier to obtain loans with lower interest rates, and can even help when you’re applying for jobs or apartments. If you’re planning on filing for bankruptcy in Pennsylvania, you should consult with a Philadelphia bankruptcy attorney to better understand how bankruptcy impacts your credit score – and what you can to do rebuild good credit as quickly as possible.
How Does Filing Bankruptcy Affect Your Credit Score?
Filing for bankruptcy will cause a temporary decrease in your credit score. However, it is possible to reverse the damage and build good credit by consistently following some financial tips, which our Montgomery County bankruptcy attorneys discuss later in this article. First, we’ll discuss:
- How your credit score might be affected if you file for Chapter 7 or Chapter 13 bankruptcy
- How long it takes for a Chapter 7 or Chapter 13 bankruptcy to come off your credit report
What is the Average Credit Score After Chapter 7 or Chapter 13?
The answer varies from debtor to debtor, because the way bankruptcy affects your credit score depends partially on how high your score was before you filed for bankruptcy. Generally speaking, the higher your credit score was before you filed, the more it is likely to decrease as a result of the bankruptcy. If you started out with a lower credit score, you will likely see less of an impact. You should consult with an experienced Berks County bankruptcy lawyer to learn more about how your credit score could be affected if you choose to file.
How Long Does Bankruptcy Stay on Your Credit Report?
The answer to this question depends on whether you file Chapter 7 bankruptcy (straight bankruptcy, liquidation) or Chapter 13 bankruptcy (wage earner’s plan, reorganization). A Chapter 7 bankruptcy will remain on your credit report for 10 years before being removed. A Chapter 13 bankruptcy will stay on your credit report for seven years, meaning Chapter 13 comes off your credit report three years earlier than Chapter 7. It is wise to carefully check your free credit reports on an annual basis to make sure that there are no errors – and to confirm that the bankruptcy information has been removed once the seven-year or 10-year period is over.
How to Rebuild Credit After Filing Bankruptcy in Pennsylvania
Just because bankruptcy will remain on your credit report for seven to 10 years does not necessarily mean you will be ineligible for loans throughout that time – or that you have to wait to start rebuilding your credit. On the contrary, you can begin to reestablish healthy credit shortly after filing. The speed at which your credit score improves will depend on your ability to stay organized, stick to a budget, and make all payments due on a full, timely, and consistent basis. Some tips for rebuilding good credit after filing bankruptcy include:
- Getting a secured card. A secured card is similar to a regular credit card, but is “secured” by a deposit the cardholder makes to open the account. Secured cards are ideal for debtors with bad credit, who can see rapid credit improvements by regularly paying off their balances and keeping credit utilization low.
- Keeping a realistic but firm budget. Clear budgeting is essential for good financial health. Your budget should be simple enough to understand easily, but detailed enough to allow for accurate expense-tracking.
- Using a calendar, phone reminders, or other methods to avoid missing payment due dates. Even a single missed payment can seriously damage your credit score. The best way to avoid this situation is to make your payments on time – even if that means setting alarms, reminders, or calendar events for yourself.
- Paying off overdue amounts. If you currently owe past-due amounts on any of your bills or accounts, try to pay them off as soon as possible to minimize the negative impact to your credit score.
- Staying current on student loans and other payments. Many entities report borrowers’ or customers’ payment histories to the major credit bureaus (Experian, Equifax, and TransUnion). If you miss a payment, it could appear on your credit report shortly afterward. The fewer payments you miss, the higher your credit score will be.
Philadelphia Bankruptcy Attorneys for Chapter 7 and Chapter 13
Filing for bankruptcy can help you get rid of debt, stop creditors from contacting you, and in some situations, even stop foreclosure on your home. However, it is important not to begin the process without consulting a Bucks County bankruptcy lawyer for legal guidance on the short-term and long-term effects of bankruptcy, as well as the laws and procedures you must follow in order to file successfully.
With over 30 years of experience, we’re ready to help you turn your finances around. For a free consultation, contact the Philadelphia bankruptcy attorneys of Young, Marr, Mallis & Associates online, or call today at (215) 701-6519.