Starting Over After Bankruptcy
- When you are faced with filing bankruptcy, the immediate relief of debt forgiveness, and ending creditors' phone calls and stress is replaced by starting over. But starting over means dealing with little or no assets and severely damaged credit that makes having credit cards, car loans and mortgages intimidating.
- Most people lose all credit card accounts in the process of a bankruptcy. Getting approved after the completion will be very difficult, particularly in the first two to three years. When you do qualify for a credit card again, it will generally start at the highest rates, ranging between 26% and 29.9%. With positive credit history, negotiate with creditors to reduce rates since they won't do it on their own.
- While it will be difficult to qualify for credit cards and other loans, purchasing a car is feasible in and after bankruptcy. Car ownership is one of the fastest ways to show positive credit history. However, expect to have higher interest rates of 10% to 15%.
- With diligence in auto and credit card debt payments in the first two years of bankruptcy, you can begin to see a credit score that meets the criteria for a mortgage. Raising your credit score will have more to do with qualifying than the bankruptcy will. Bankruptcy will have an adverse affect on the rate, but not make it impossible to own a home.