After completing a bankruptcy case it may be useful to obtain some credit. No law restricts the availability of credit so each lender may consider the bankruptcy filing, the credit history as shown on the credit report, and other indications of credit worthiness in deciding whether to make a new loan. Each lender is different so it pays to shop around and compare loan terms before making a new loan.
A Chapter 7 bankruptcy is shown on a credit report for a period of ten years. Some credit is available immediately after the Chapter 7 case is discharged and frequently credit offers are sent by mail for credit cards and car loans. Most auto dealerships will arrange financing of a vehicle after the Chapter 7 case is discharged. Most home loans through government backed loan programs are available two years after the Chapter 7 case is discharged.
A Chapter 13 repayment plan lasts between 3 and 5 years and the court will normally limit the use of credit by court order while the plan is in repayment. To obtain court permission to use credit during a Chapter 13 plan requires attendance at a 2 hour credit workshop and a letter from the trustee authorizing the use of credit. Then, with the trustee’s letter of approval, credit may be obtained for normal usage such as trading cars, home repairs, and home purchases. After the Chapter 13 case is completed, the credit report will show the bankruptcy filing for a total of ten years starting with the date the Chapter 13 case began. A good repayment history in the Chapter 13 case will greatly improve the availability of credit after the plan is completed. In cases where debts are completely repaid in the Chapter 13 case, the trustee will make this notation on your credit report to aid in re-establishing credit.
