The Ins And Outs Of Chapter 13 Bankruptcy Relief
Debtors can potentially keep their property and catch up on delinquent payments if they file for Chapter 13 bankruptcy. Gwinnett County bankruptcy lawyer Keith Cornwell has helped many residents by guiding them in the right direction, and sometimes that includes filing for Chapter 13. Most debtors emerge from this type of bankruptcy with all of their assets left intact and their accounts in good shape. It should be noted that filing for this type of bankruptcy could have a bad impact on your credit rating in spite of all the benefits that come with it. There are steps that you can ultimately take in order to avoid future bankruptcy filings and rebuild your credit over time. Keep reading to learn more about what options you have if you’re in debt.
How Long Before a Filing Leaves Your Credit Report?
The Fair Credit Reporting Act specifies that any bankruptcy filing can only ever stay on your report for 10 years after you file. Most Chapter 13 filings will get removed after around seven years or so. The clock starts ticking when you first file your case. Most debts will take around three to five years to settle, and this means that your Chapter 13 filing will really only stay on for around two to four years after you complete it.
Can You Take Out a Loan During Bankruptcy?
The entire process of going bankrupt can take up to five years. If you need to borrow money during that time, then you will have to obtain permission from a bankruptcy court. Most courts won’t oppose any request if you have to incur the new debt for any valid reason.
While you will have to prove you can make monthly payments, you won’t have to seek court permission to incur any new debt after you complete the Chapter 13 process. Each lender has their own set of guidelines for reviewing new credit applications. How much you can borrow after you’re done will simply depend on the lender. Most people can easily obtain credit after they’re done with the process. The influence of the bankruptcy process will diminish over time.
How to Build Your Credit Back Up Again
You can take several important steps to rebuild your credit and avoid ever having to file for any sort of bankruptcy relief again, but you have to remember to stick to a plan once you put it in motion.
Check Out Your Credit Report Regularly
Any sort of error on your credit report can hurt you when you’re trying to build your credit back up. Look over a copy of your credit report and make sure that there aren’t any errors on it. Contact the creditor and the reporting agency if there are any mistakes.
Be Very Careful When Your Incur Any Sort of New Debt
Many debtors start receiving offers for new credit cards or loans the moment they receive a discharge. Make sure to read the fine print very carefully since many of them carry annual fees and high-interest rates that can really drive up credit card bills.
Consider applying for a secured credit card that’s issued by the bank that handles your checking account. You generally have to deposit an amount of money that’s equal to your credit line whenever you apply for one of these cards. Avoid any cards that come with high fees and make sure that monthly payments are reported to the credit bureaus.
Keep your accounts current on any new credit cards by making sure to make timely payments every single month. Most credit cards have huge annual interest rates and fees, but those who pay them off every month can avoid accruing interest on their accounts.
Mix Up Your Spending Habits
Plenty of people go into debt because they lose their job or incur sudden medical expenses, but there are also people who end up having to file for bankruptcy relief because they simply spend too much. Look at your current spending habits and change them in order to avoid any future filings.