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Life after a New York bankruptcy

When people consider filing for bankruptcy in New York, one recurring question is, “Will I ever get credit again? Be able to buy a house? Get a car lease on favorable terms?” The universal assumption seems to be that after you file, you lose any chance of being able to benefit from the advantages that access to credit can bring.

It is true that a bankruptcy can stay on your credit report for up to 10 years, but many credit card companies, mortgage lenders, and automobile financing companies will not automatically reject your application because you filed for bankruptcy in the past. Case in point: if you want to buy a house, you could qualify one year after a Chapter 13 bankruptcy, and two years after a Chapter 7. The base requirement is that you demonstrate financial responsibility after your discharge.

Below are some steps that you can take to rebuild your credit.

  • Get a copy of your credit report from the primary credit reporting agencies. Review it for any inaccuracies and dispute those that you find.
  • If your report is missing any evidence of financial responsibility, such as a line of credit that you consistently pay on time, then bring it to the attention of the credit agencies. You want as much positive information to be on your file as possible.
  • Apply for a secured credit card. Requirements for approval will vary from one financial institution to another and even one card type to the next, but the general conditions call for you to put a certain amount of money into a bank account to act as collateral. Regularly paying off the card will improve your credit, and after you demonstrate a consistent ability to pay on time, the security requirement may be removed from your account, and you may even have your credit limit increased.
  • Apply for a secured loan. There are two primary types of secured loan, and both of them tend to be offered by smaller banks and credit unions. With one, you borrow against money you have already deposited. Until the loan is paid off, you won’t be able to access those funds. With the other, there is no cash paid up front, but the money you are loaned goes into a savings account and made available only after the necessary payments have been made. In this situation, the lender provides your payment history to the credit bureaus.

If you are contemplating bankruptcy, then hances are that your credit score is already low because of late payments, foreclosure proceedings, or court judgments. If there is no other way to deal with these financial demands, then bankruptcy can actually improve your situation by eliminating these debts and putting you in a position to improve your credit score over time. A New York bankruptcy attorney can help you get the fresh start you need and counsel you on strategies to rebuild your credit afterward.

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