There are many reasons why people may feel anxious about filing for personal bankruptcy. Often, they worry about how a bankruptcy might limit their access to credit opportunities in the future. It is standard for revolving lines of credit to close when someone files for bankruptcy.
The filer may also struggle to secure good credit offers after bankruptcy. Those with major blemishes on their recent credit record may have to pay security deposits for revolving lines of credit. They may have to pay larger fees and accept higher interest rates.
Most people require a degree of personal credit to maintain financial solvency. How long can a personal bankruptcy filing limit access to credit opportunities?
Credit becomes available quickly after discharge
The good news for those worried about not qualifying for credit cards and other lines of credit is that they may be able to qualify within just a few weeks of the courts granting a discharge. Credit card lenders are often among the first to extend opportunities to those who have recently completed bankruptcy.
After all, there are restrictions on how soon someone can file for bankruptcy a second time after a discharge. The credit terms offered immediately after bankruptcy often aren’t the best. However, securing new lines of credit leads to rebuilding the credit score more rapidly.
Those who previously filed for bankruptcy can often upgrade to better credit options within a year or two. Frequently, people can qualify for car loans and mortgages within a few years, although the terms may not be ideal. The more time passes and the better someone’s credit becomes, the more options they have for new lines of credit.
Eventually, the record of the bankruptcy comes completely off of their credit report. Someone who discharges their debts in a Chapter 7 bankruptcy only has the bankruptcy on their credit report for 10 years. Those who complete a Chapter 13 repayment plan and secure a discharge have the record of their bankruptcy on their credit report for seven years. After enough time passes, potential lenders no longer see that a bankruptcy even happened.
Learning more about the basics of personal bankruptcy can be beneficial for those dealing with financial struggles. Bankruptcy can help people address debt and can also pave the way to improved financial circumstances in the future.
