One of the most frequent questions I get from prospective clients in Eden Prairie, Minnesota is: “What happens to my credit after filing bankruptcy?” Oftentimes, my Eden Prairie, Minnesota clients are asking because they are worried that a bankruptcy filing will hurt their credit or make it more difficult for them to get approved for financing in the future. One of the greatest benefits to filing bankruptcy is that it is often the quickest way to improve your credit and get quality financing.
When you receive the discharge of your debts at the end of the bankruptcy process, in both Chapter 7 and Chapter 13 bankruptcies, your credit report basically resets. That is because all of the creditors included in your bankruptcy have to remove themselves from your credit report. That can be both a good thing and a bad thing. It is good when it gets rid of negative things, like missed payment history or high balance accounts. It can be bad when you lose on-time payment history or a low percentage of debt ratio.
Ultimately, it doesn’t matter if you lose the good stuff, because you can just get it right back. Here are some examples of how my Eden Prairie, Minnesota clients can quickly build back their credit after bankruptcy.
- If you have a car loan or mortgage you are continuing to pay on, but it was discharged off of your credit report, you can report your own on-time payment history to the credit bureaus yourself. You can do this by filing a dispute with each bureau correcting the payment history for these accounts and attaching proof of the on-time payments. If you file bankruptcy with Kain & Scott, our Credit Repair Specialist and Free 90 Day Credit Repair Program will provide you with the detailed steps on this process.
- Open a secured credit card with your bank. This is a credit card where you secure the credit limit with cash collateral. These look great on credit reports so long as you charge something small to them every month (think Netflix) and then pay them off every month.
- After you have a secured credit card reporting to your credit, you can try an unsecured card. My Eden Prairie, Minnesota clients have positive experiences opening Capital One Venture cards after their bankruptcy discharge. Again, you will want to charge something small each month and then pay it off on-time each month.
- Take advantage of the Experian Credit Boost and get credit for your on-time utility bill payments.
- Download the Sezzle app and use their Sezzle Up program to boost your credit report. Sezzle is an app you can use to finance online purchase instead of using a credit card. They break down your purchase over 4 payments. If you make all four payments on time, they will report this to the credit bureaus if you are enrolled in their Sezzle Up program.
It is also a wise decision to start saving for a $1,000 emergency fund so that any unexpected life events won’t derail your attempts to improve your credit and get your life back post-bankruptcy with Kain & Scott.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT KAIN & SCOTT
Kain & Scott’s clients have improved their credit for decades after filing Chapter 7 and Chapter 13 bankruptcy. If you are looking to improve your credit quickly, reach out to Minnesota’s nicest bankruptcy law firm by going now to www.kainscott.com. You will be thankful you did.