Many people despair at the thought that they may never get credit again after filing for bankruptcy. But the truth is far from that. Bankruptcy attorney Benjamin Ginter, who runs the Law Offices of Benjamin J. Ginter in Cranford, New Jersey, explains how it is possible to rebuild your credit rating.
Your credit report is based on many factors. This includes your income and how much debt you acquire after the bankruptcy. It is also based on whether or not you are paying your existing debt on time.
Good and Bad Credit
I like to think that there is good credit and bad credit, as far as the effect the credit will have on your credit rating is concerned. Bad credit is like a department store card, such as Target or Bloomingdales, known as an unsecured credit card. Good credit consists of things like financing a car or your mortgage.
When you have a mortgage and you make payments each month, your credit will go up. But if you open up many department store cards and you have open credit limits, that could negatively hurt your credit.
Rebuilding Your Credit
If you trying to rebuild your credit, do not open any unsecured credit cards. If you need a credit card, open up one, use it and pay the balance in full each month. Make sure you do not accumulate a lot of debt. And pay your bills and existing debt on time.
If you need a car and you can get one, that’s fine. But make sure you make payments on time, as late payments will hurt your credit. And be optimistic: Over time, your credit will improve, as long as you play by the aforementioned rules.
Alerting Creditors
The bankruptcy court notifies, by mail, all creditors advising them of:
- The filing of the bankruptcy
- The case number
- The automatic stay
- The name of the trustee assigned to the case (if filed under chapters 7 or 13)
- The date set for the meeting of creditors
- The deadline, if any, set for filing objections to the discharge of the debtor and/or the discharge of specific debts
- Whether and where to file claims
The exact information in the notice may be slightly different depending on the chapter under which the case is filed.
