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Filing Chapter 7 Or Chapter 13 Bankruptcy Is Not The End Of The World

Actually, almost anyone can get credit soon after a bankruptcy. It's just a matter of knowing how. It's true that bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your creditworthiness. But the effects don't have to be lasting. Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms. One of the best things about getting a fresh start by filing bankruptcy is that it allows you a chance to rebuild your credit score.

Why? Because the first step in re-building your credit is to get rid of some debt...and that's what bankruptcy does best. With less debt, it's easier to keep up-to-date on your remaining obligations, and less likely you will fall behind again.

If you're a recent bankrupt, here are two things you need to keep in mind:

Nothing in credit is "forever." A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed -- if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once.

You have to get and use credit to build your credit score. Living on a cash-only basis may be a smart choice for those who really can't handle credit. But if you want to rebuild your credit score, you can't sit on the sidelines.
Learn from your mistakes
Although repeat bankrupts show that getting credit after a Chapter 7 or Chapter 13 filing is possible, you shouldn't want to emulate those who file more than once. At first glance, people who file more than one bankruptcy seem to be beating the system: They run up big bills and then walk away.

Think about it a little more, though, and you'll see these multiple bankrupts are really defeating themselves. Their debts and credit history often mean they're paying out big bucks in high interest payments during the time when they're prohibited from filing another bankruptcy. (The 2005 bankruptcy law provides that, under Chapter 7, eight years must elapse before you can refile. If you go for Chapter 13 after a Chapter 7, you must wait four years. Going from one Chapter 13 to another, two years must elapse.)

And most people can't file for Chapter 7 liquidation if they have significant assets to protect, such as home equity or savings. So these folks who are repeatedly going broke often have little to show for all the money that's leaving their pockets. Instead of building wealth over time, they're losing ground. Instead, use your bankruptcy discharge as a wake-up call to figure out what's wrong with your finances and fix it.

If your problem was overspending, you'll want to look for all of the information you can get about creating and sticking to a budget.

If you didn't have enough savings to survive a job loss or other setback, get serious about establishing an emergency fund.

If you were sunk by medical bills, seek a job with insurance coverage or check to see if your state offers coverage.

The St. Louis bankruptcy attorneys at Castle Law Office provide legal assistance for those who are going through severe financial difficulties. Filing for bankruptcy is a way to move past crippling debt and to get on with your life. If you or a loved one in the St. Louis, Missouri and Illinois area are considering filing for bankruptcy, contact Castle Law Office for a free legal consultation today. We can offer help and a fresh start to citizens in St. Louis County, Jefferson County, St. Charles County, East St. Louis, Franklin County, St. Clair County, Boone County, and the entire state of Missouri, as well as Belleville, Granite City, Fairview Heights, O'Fallon and Alton. We help to stop foreclosure, repossession and wage garnishments. All of our attorneys are licensed as Missouri bankruptcy attorneys and Illinois bankruptcy lawyers.

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