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When can you start using credit again after filing bankruptcy?

Some people worry that they won't have access to credit after a bankruptcy. Bankruptcy has a direct and provable negative effect on your credit, in part, as a way to deter people from filing unnecessarily. However, it is often less damaging to your credit than multiple delinquent accounts and judgments against you.

Typically, your open lines of credit that you do not reaffirm as part of bankruptcy proceedings wind up discharged and unavailable to you. It is common for people to wonder when they might be able to qualify for credit again after they finish bankruptcy. The good news is that so long as you are responsible and make sure you have your priorities straight, it is possible to begin using credit again within weeks of your discharge.

Credit card companies don't mind lending to the recently bankrupt

Regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, there are strict limits in place regarding your ability to file for bankruptcy again in the future. Under federal law, you have to wait at least eights years before you can file for Chapter 7 or two years if you file Chapter 13.

Even if you don't ever start paying them back, they will have the opportunity to take legal action against you, up to and including a lawsuit for a garnishment of your wages. Given that you have a history of what they may see as an irresponsible use of credit, lenders see that as a potential for not only interest but also penalties and fees.

Your recent discharge makes them relatively certain of the legal right to repayment as well. Some credit card companies will start sending you offers within a few weeks of your discharge. Many of them require a security deposit, but they are a good way to start rebuilding your credit provided that you use them responsibly and pay them off in full each month.

You can probably qualify for bigger purchases within a few years

Some car dealerships have very good terms for car loans for individuals with bad credit. Others engage in predatory practices because they know people who have recently gone through bankruptcy have fewer options. It is best if you look carefully at the fine print for any vehicle purchase you make shortly after bankruptcy, particularly if the car salesman in question makes a habit of targeting their advertisements toward people who have gone through bankruptcy.

Standard car loans and home mortgages may become an option within two to three years of your bankruptcy discharge. You may have to pay higher interest rates because of the bankruptcy's effect on your credit, but many lenders will consider you as a borrower if you have paid all of your accounts on time and remain employed.

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