It is no secret that a bankruptcy filing is notorious for negatively affecting a debtor’s credit. On average, a debtor’s credit score may automatically drop by 100 to 200 points or more. Also, their bankruptcy history may appear on their credit report for 10 years for Chapter 7 and seven years for Chapter 13. This record may complicate the prospects for personal loans, mortgage loans, and even renting property for quite some time. So, understandably, you may want to be proactive in improving your credit as soon as it plummets. For this, please read on to discover whether you can legally and safely rebuild your credit while your bankruptcy proceedings are still ongoing and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you adopt the best practices at this time.
Can I legally use credit while my bankruptcy case is ongoing?
Before you get too ahead of yourself, you must remember that as a debtor in a bankruptcy case, you are subject to several limitations regarding your financial actions. With that said, you must understand the scope of your legal allowance for building your credit while your case is ongoing. For the most part, you may be permitted to apply for and use secured credit cards. These card types require a cash deposit in advance, so monitoring your financial behavior is made easier.
As for taking on an unsecured credit card, you may first have to seek approval from your appointed bankruptcy trustee. This is because if it seems like you are attempting to incur significant debt during your bankruptcy case, the New York State Bankruptcy Court may view it as a violation. Specifically, you may get accused of committing fraudulent activity, ultimately getting your case discharged before it can be finalized.
What are safe credit-building strategies before my bankruptcy is finalized?
To reiterate, opening a secured credit card is one of your safest bets while still in bankruptcy proceedings. But here are other uncontroversial yet effective credit-building strategies that will slowly demonstrate your changed, responsible financial behavior that is sure to get noticed by the credit bureaus. Nonetheless, you may consult with your proficient bankruptcy attorney on whether or not to take the following financial actions at this time:
- You may ask your trusted family members with good credit to become an authorized user on their credit card accounts.
- You may apply for eligible small-installment loans, so long as you can ensure executing consistent on-time payments.
- You may continue making consistent on-time payments on your non-dischargeable debts not included in your bankruptcy.
- You may enroll in a reporting service for your rent and utility payments to show your consistent on-time payments.
You should not regret your bankruptcy filing if it is the best decision for your financial state at the time. You just need to have patience and give yourself grace when slowly rebuilding after this major hit in your credit history. To conclude, there is no need to go through the important steps of bankruptcy and credit building alone. Please seek the support and assistance of a competent Rockland County bankruptcy attorney. Contact The Law Offices of Allen A. Kolber, Esq., P.C., today.
