This is another one. People believe they will be forbidden from using credit for the next ten years if they decide to file bankruptcy. This is false.
The truth of the matter is people are able to access credit even though they have filed bankruptcy. For people in a Chapter 7, this can be as soon as the week after you file. I have seen people file a bankruptcy and immediately go and finance another car. Many creditors may wait until your Bankruptcy is over before extending credit to you, but you should be prepared to be inundated with offers for extensions of credit via direct mail.
Your access to credit will depend on several factors related to your financial situation, including how much money you make and how long you’ve been at your job. It is likely that you will have to pay a high interest rate if you decide to take one of the offers that you receive after bankruptcy. But the notion that you will be locked out of access to credit is a myth perpetrated by people who make money as long as you continue to suffer.
A couple things about bankruptcy to remember when wondering about post-bankruptcy creditors- creditors will extend credit to you because they know you will not be able to file another bankruptcy in the near future and because they know you have little to no other debt.
You can use bankruptcy as a trampoline to get you out of financial trouble and get a fresh start. You won’t be barred from accessing credit because of the bankruptcy. The interest rate may be pretty high but there is no black out that stops you from accessing credit.
When you look at the benefits a bankruptcy can provide to you in terms of eliminating debt and giving you a chance at a fresh start, there are few options that will give you a better chance at bouncing back from financial catastrophe. Choosing to not file bankruptcy because you are afraid that you are going to lose credit is a decision many people make. The cycle of debt continues, your credit score plummets and the thing you fear the most (no access to credit) actually becomes a reality.