Bankruptcy may not be as bad for your credit as you think

Some New Mexicans may shy away from bankruptcy because they believe it will be devastating for their credit. While a Chapter 7 consumer bankruptcy remains on your credit report for 10 years, many lenders are still willing to extend credit to a recently bankrupt borrower. Because you cannot receive another Chapter 7 discharge again for eight years, you are not likely to have new debt discharged.

It is true that your actual credit score (an assigned number reflecting your likelihood to pay debts fully and on time) will normally be lower (less favorable) because of the bankruptcy. However, you will likely start to receive credit offers again, but you could be offered a higher interest rate or they may be for “secured” credit cards that require a deposit to be paid up front.

After bankruptcy, you can immediately take steps that will help to improve your credit score like:

· Incur new debt, and make payments on it. Your payment history is 35% of your creditor score. We recommend applying for a credit card and using it every month for small purchases, like gasoline.

· However, do not take out more debt than you can pay on time, and pay everything by the due date or sooner.

· Pay more than the minimum payment if you can.

· Do not apply for several loans or credit cards in a short time.

· Remain with the same employer.

It will take time to become eligible for a home mortgage, but nowhere near the length of time the bankruptcy stays on your credit report. After a Chapter 7 discharge, you must wait two years to apply for a Federal Housing Administration or FHA loan and four for a conventional mortgage, reports the New York Times. The longer you wait to apply, your credit score may continue to improve and help you to get a lower interest rate.

Discuss these matters with an experienced bankruptcy lawyer. Call us today-we can help!

In Albuquerque and throughout New Mexico, the law firm of Giddens & Gatton Law,amp; Jacobus has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.

We represent many debtors and creditors in Albuquerque, Santa Fe, Las Cruces, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C., at 505-273-3720 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law,amp; P.C., is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.