This idea that bankruptcy requires turning over all of your property is a myth, particularly in Chapter 13 cases. If you are considering bankruptcy and need someone to help you separate the myths from the facts, contact one of the experienced bankruptcy attorneys at Illini Legal Services.
Illinois Bankruptcy Attorneys
At Illini Legal Services, we have been helping people and businesses develop a financial plan to solve their debt problems since 1975. If you are struggling with debt and need to speak with a knowledgeable bankruptcy lawyer, we can help.
To schedule a free consultation with a bankruptcy attorney at our firm, call 630-405-5027 or contact us by e-mail.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
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Attorney C. David Ward has been handling bankruptcy cases since 1975. He is joined by in his bankruptcy practice. We can explain your options and help you make an informed decision about bankruptcy.
We handle Chapter 7 and Chapter 13 bankruptcy. Contact us to learn how these bankruptcy options may provide the debt relief you need. We have offices in Aurora, Oswego, West Chicago and Geneva.
Rebuilding Your Credit After Bankruptcy
Bankruptcy has a long-lasting impact on a person’s credit rating, and on his or her ability to obtain credit in the future. The impact is not entirely negative. In some cases, filing bankruptcy may actually improve a bad credit rating. In addition, there are a number of steps a person can take to improve his or her credit after bankruptcy. An experienced bankruptcy attorney at Illini Legal Services in Aurora can offer valuable advice about how credit can be improved after a bankruptcy, and how to work for a better financial future.
Discharge Results in an Improved Debt-to-Income Ratio
Most of the debtors who consider filing bankruptcy already have poor credit histories. Their credit ratings have suffered because of slow payments, late payments, repossessions, extended credit, charge-offs, foreclosures or judgments. After their bankruptcy, however, the discharged debts will no longer count against their income, so their credit may be better after the discharge than it was before. In addition, while a bankruptcy case will remain on an individual’s credit report for up to ten years; late payments stay on for up to seven years, so the effects are similar. Bankruptcy, however, gives consumers a chance to improve their credit faster because they will have an improved debt-to-income ratio after discharge.
Using Credit Cards Wisely
In some cases, individuals may be able to keep one of their credit cards even after bankruptcy. They may retain a card that they already have but that has no debt on it, or they may reaffirm a debt on a card, which means that they sign a contract with the credit card company after filing bankruptcy that says the debt will be paid anyway if the holder is allowed to keep the card. Some companies are willing to agree to this arrangement because they will be paid for the debt, whereas without reaffirming the entire debt could be discharged in the bankruptcy proceeding.
A secured credit card is another option for rebuilding credit after a bankruptcy. A secured credit card is issued by a bank, and is backed up by money that is kept on deposit with the bank that issued the card. The bank account is the security for the card. If the bill for the credit card is not paid on time, the bank may use the money in the account to cover the payment. The limit on the card can be increased by increasing the balance in the linked bank account. The issuers of secured credit cards report about their customers to the credit bureaus, just like the issuers of other credit cards, so any subsequent positive payment history will be available to future creditors. The interest rates for secured credit cards are often higher than the rates for non-secured cards, but they still can be worth the extra cost by virtue of the redeeming value of the new and reported financial stability.
Co-signed Loans
Still another way to re-establish credit after a bankruptcy is to obtain a loan with a co-signor whose positive credit convinces the bank or other lender that the loan is a safe bet. As payments are made on the cosigned loan, the positive credit history affects both borrowers.
"Credit-Repair" Services
One "credit repair" method to avoid after bankruptcy is seeking help from an unscrupulous "credit-repair service." Many consumers pay substantial sums of money to so-called “credit clinics” to "fix" their credit reports when, in actuality, only time can improve bad credit. A credit repair service or clinic can legally do nothing that a consumer cannot do on his or her own, for free. Some credit-repair companies actually encourage consumers to commit fraud by attempting to create a second identity. The Federal Trade Commission has investigated these often-fraudulent services and warns consumers to be wary of promises that seem shady or too good to be true.
Conclusion
In order to make the most of a bad situation, debtors must learn from bankruptcy and demonstrate greater financial responsibility in the future. A lawyer experienced in bankruptcy law at Illini Legal Services in Aurora is in a strong position to advise consumers not only before and during the bankruptcy process, but also after, guiding them through the necessary steps to improve their credit ratings and avoid future financial catastrophes.
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