Is there Credit after Bankruptcy?

If you think your financial life is going to be over after bankruptcy, you’ll be pleased to know that an increasingly competitive lending industry is willing to give you nine lives. The fact is that lenders are much more willing to look beyond the past to what you have done lately. Lenders are the first to realize that a bankruptcy usually improves a person’s financial position, so they are not at all quick to dismiss someone with a recent discharge. You should know, however, that the lenders will be in the driver seat for some time to come in terms of the rate of interest you can expect to pay.

Will I be able to get a credit card after bankruptcy?

Most people who file for bankruptcy are astonished by the number of credit card offers they receive after their bankruptcy is discharged. You will get offers, and most of them will be from finance companies that prey on people with bad credit. The rates and the fees on these cards are typically astronomical. Bankruptcy debtors are actually seen as good risks for these companies, yet they are offered the same high rates and fees. Hold out for reasonable offers or obtain a secured credit card with lower fees from your bank.

Will I be able to obtain a home loan after bankruptcy?

The short answer is yes. Recent data shows that people are able to obtain financing in as few as two to three years following a discharge, and, surprisingly, they are able to obtain the same favorable terms they might have received prior to their credit problems. These days, lenders are much more concerned with the size of your down payment and the security of your income than they are your past credit history. Plus, since the relationship between your total debt payments to your monthly income will be more positive, you’ll be considered a good risk. It’s the reality of the “new normal” with which lenders are dealing.

Is my credit forever ruined after bankruptcy?

Most bankruptcy experts will contend that bankruptcy will, in most circumstances, actually improve a credit record. If you consider the havoc that was wreaked on your record that led to your filing, your credit after bankruptcy would be viewed much more favorable by prospective lenders. For many people, a bankruptcy discharge allows them to focus more attention on building their net worth and positive cash flow position which can be much more meaningful for creditors.

Will I be able to get a job after bankruptcy?

According to recent data, as much as 50% of employers conduct credit checks on prospective hires. Many of them will deny that they make hiring decisions based on the condition of a person’s credit, using the report, instead, to verify past employment and Social Security information. Employers who hire people to handle money or deal in finances will likely deny employment to people who have a recent history of past due accounts and collections. In any case, if you are denied employment due to your credit history the employer must tell you and provide you with a copy of your credit report.

In the case of a bankruptcy, federal law prohibits employers from discriminating against a person who has filed. Of course, an employer can use just about any other reason for not hiring a person. You will know up front if the employer will be conducting a credit check. Your best strategy is to be out front with it and provide the employer with specifics about your situation that can perhaps alleviate any concerns they might have. If you are able to present a strong case for your qualifications and what you’ll bring to the company, the employer will likely focus on those positive aspects.