The Myths Surrounding a Chapter Seven Bankruptcy Discharge

Written by Adam Peck Category: Nursing Homes January 23rd, 2013 3 min read

There are many myths floating around out there about how filing for bankruptcy affects your credit and the long term after effects of a chapter 7. While filing bankruptcy under a chapter 13 is a whole different game regarding the effect on your credit, when you file for bankruptcy under a chapter 7 it truly is what it is referred to; a fresh start.

The first thing to keep in mind after your chapter 7 bankruptcy is discharged is you now are essentially debt free. In the eyes of the creditor this is now a good thing. Sure the creditor sees that you went through a file and that is an adverse issue but now you have wiped out all your debt that you could not afford and you have got a fresh start.

Another factor the creditor looks at is that according to law your filing for bankruptcy by way of a chapter 7 and a consecutive discharge prohibits you to file for bankruptcy under a chapter 7 for eight years. Hence you will not be able to discharge your debt with them again for at least eight years.

Your bankruptcy attorney will advise you that almost immediately after your bankruptcy has been discharged you should start receiving secured credit card offers with small limits and rather high interest rates. These cards will no doubt also have a high annual fee. Do not be deterred by these factors. You have a filing on your credit and are still a high risk but with a secured card where you have to make a deposit and you are only allowed to use credit up to that deposit, the credit card company is mitigating the risk.

You should open accounts with at least one or two of these secured credit cards but do not use them just keep them open. Slowly after a few months you may receive an unsecured credit card offer with a very small limit, a high interest rate and a hefty annual fee. You should open this account and wait. Again do not use the card. After a little time the credit card offers will start to become more attractive and annual fees and high interest rates will slowly begin to disappear.

Bankruptcy Attorneys will not be able to tell you exactly at what point you will be eligible for a mortgage after filing. For this you will have to consult a mortgage specialist. However, depending upon the type of mortgage you are applying for, the general rule is 2 years after a bankruptcy has been discharged, some credit has been reestablished and there are no late payments on the new credit.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.