Fix Bad Credit with Bankruptcy
Is it possible to fix bad credit with bankruptcy? It can sound crazy knowing how much a bankruptcy on your record can lower your FICO score but if you are drowning in debt, and finding firm financial footing to pull yourself out of bad credit seems impossible, bankruptcy can be crazy enough to work.
With the help of special programs like credit cards and auto loans for bankrupt people you can rebuild your credit after bankruptcy. However, keep in mind bankruptcy is not some magic wand to be used lightly. Different circumstances may require different types of bankruptcy.
Two Types of Personal Bankruptcy
Chapter 7 - The Liquidation Plan
You have a 341 hearing to compare your debt to income ratio and if you are under the state median income or your income is to low for your ratio your assets are liquidated in a process that takes two to three months.
Chapter 13 - The Repayment Plan
If you make more than the state median or your trustee feels that you make enough money to pay back the creditors in payments, then you repay your debt with an affordable monthly payment set up by the judge over a three to five year period.
How to Fix Your Credit after Bankruptcy
Getting an auto loan is one of the best ways to rebuild credit after a bankruptcy. Properly maintained auto financing after bankruptcy can restore creditor confidence in your ability to manage your debts and lower future interest rates after a year of timely payments.
Remember, consistency is key. Use a bankruptcy auto loan calculator to calculate how much of a monthly payment you can afford and avoid finding yourself buried in debt and repeating past mistakes. Just filing for bankruptcy won't fix your bad credit problems but it can be the start of putting your past problems behind you.
Remember we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.
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