Bankruptcy doesn't have to be the end of your ability to get credit. It can provide a fresh start to a healthier financial future unencumbered by mountains of debt. However, that won't happen overnight. It takes time, patience and careful planning to repair and rebuild your credit.
The bankruptcy process will zero out debts like collections accounts and overdrawn credit cards. However, the negative impact on your credit score will remain for some time -- typically 10 years if you file Chapter 7 and seven years if you file Chapter 13.
After completing the bankruptcy process, you may feel like you never want to get another credit card or take out another loan again -- and that you couldn't even if you wanted to. However, you can begin to improve your credit score with carefully chosen products designed for high-risk borrowers who need to rebuild their credit.
Secured credit cards
To get a secured credit card, you'll typically need to make a deposit that will be the amount of your credit line. You can make purchases for up to the amount of that line. By paying what you owe each month, you can show that you can responsibly handle a credit line. Some companies will offer people a line that's a little above their deposit.
Small personal loans
A personal loan can help you diversify your debt. You can use this to purchase things you need or even to invest. By making your payments on the loan in full and on time each month and making additional payments when you can, you can rebuild your credit.
It's essential to monitor your credit throughout this process. There are credit monitoring services that allow you to do that. The more positive steps you take to rebuild your credit, the faster you'll see your credit score improve.
If you're contemplating bankruptcy, an experienced Long Island bankruptcy attorney can help you determine whether Chapter 7 or Chapter 13 is appropriate for you. They can also provide information about what the process entails.