One of the main factors that prevents people from filing Chapter 7 or Chapter 13 bankruptcy is the fear of not being able to obtain new credit in the future. There are many misconceptions about bankruptcy out there, but one of the biggest ones is that it’s nearly impossible to rebuild your credit after filing. This simply isn’t true. If you are diligent and motivated, you can get your financial life back on track with relative ease, including new lines of credit.

After you file with the help of an experienced consumer bankruptcy attorney in Memphis, many of your debts will be discharged, leaving you with a fresh start. And while your credit rating will reflect your bankruptcy, it may not be as detrimental as you’ve been led to believe. Many individuals still have credit scores in the 600’s after bankruptcy, which may meet some of the minimums set by credit lenders. Plus, bankruptcy should free up more of your income, since you won’t be paying on those discharged debts, and you should also see a better debt-to-income ratio.

During the bankruptcy process, your credit will essentially be frozen, but once your discharge comes through, you will be able to pursue new lines of credit. However, this may not be advisable in all cases: sometimes it pays to wait it out, practice living on a budget, and make steady payments on any loans that weren’t discharged. Then, you can begin looking for new lenders that are willing to work with people to rebuild your credit. There are several different options you can look into:

Credit-builder loan

Many banks and credit unions offer smaller, secured loans that are specifically designed to help you build credit.

Secured credit card

Some credit card companies may give you a low-balance, secured credit card. Just be aware that these tend to have very high APRs, and should be managed prudently.

Auto loan

In the months following your bankruptcy, you may be sent many offers from car dealerships, looking to give you an auto loan. Depending on your situation, this may be an opportunity to get a practical vehicle, and start showing regular payments.

Rebuilding your credit after bankruptcy isn’t easy, and isn’t going to happen overnight. However, with the right advice, and a good amount of planning and financial responsibility on your part, you can obtain new credit and get your life back on track. If you want to learn more about Memphis bankruptcy or your eligibility to file, reach out to us at the Hurst Law Firm and ask for your free consultation!