The aftermath of filing for bankruptcy

On Behalf of | Apr 21, 2020 | Bankruptcy |

Maryland residents who are struggling to pay their debts may benefit from filing for bankruptcy. However, if you are thinking about doing so, it is important to understand the impact it can have on your credit score and history. If you file for Chapter 7 bankruptcy, it can stay on your credit report for up to a decade.

Start rebuilding your credit immediately

While a bankruptcy can stay on a credit report for many years, you can start to rebuild your credit right away. This can be done by applying for a secured credit card. If you obtain a secured credit card, your credit limit is backed by a deposit held in a bank account. It may also be possible to obtain a store or gas station credit card to help reestablish your credit. Regardless of the type of credit that you obtain, expect to pay high interest rates and other fees to the lender.

You can ask someone to cosign on a loan with you

One way to potentially eliminate fees or reduce the interest rate that you pay on a loan is to use a cosigner. Anyone over the age of 18 can act as cosigner assuming that individual has a sufficiently high credit score. Therefore, your best friend, parent or colleague could all agree to act in this role and help you rebuild your credit.

Make sure to check your credit report

It is important to ensure that debt balances that were eliminated in a bankruptcy proceeding are reported as discharged to the credit agencies. You will also want to be sure that the bankruptcy filing date has been accurately reported. Federal law allows you to request one free copy of your credit report from the major credit bureaus each year.

There may be many benefits to filing for bankruptcy such as obtaining an automatic stay of creditor contact. This may put an end to creditor phone calls, letters or other collection activities. An attorney may explain other benefits such as the potential ability to renegotiate home or auto loan terms.