One of the most popular questions that I am asked by both prospective and existing clients is “How long will it take for me to re-establish my credit?” The real answer is – not nearly as long as you may have thought before reading this posting.
If you think about it, this is truly an amazing question. Here you are speaking to a bankruptcy lawyer because you are buried in credit card debt, and you are inquiring about “getting back into the game.” The “game” as I call it, is the cycle of credit that the banks have allowed us to create over the past 30+ years.
The only reality regarding your credit is that the filing of a bankruptcy petition is reported to the major credit bureaus and remains on your report as a public record filing for up to 10 years. Beyond that, there are no longer any hard and fast rules of thumb as to how long it will take you to re-establish credit.
Yes – it is extremely important to re-establish credit after bankruptcy. Let’s face facts. We live in a plastic society. You need to have a credit card, even if just for an emergency. The hope is that, coming off of a bankruptcy filing, you will realize that you will need to use credit a little more safely going forward, and the banks know it. They also know that (a) you can only receive a discharge in bankruptcy once every eight (8) years; and (b) if they offer you a line of credit, and you accept it, THEY WILL LOVE YOU because you can’t bail out of them for another eight (8) years!!
Believe it or not, the banks will actually come back to you – you will not have to go to them. It may not be the banks that you have scheduled in your bankruptcy filing, but there are thousands of banks out there that want you as a new customer.
I recently received an email from a client who had recently filed Chapter 7 bankruptcy approximately 60 days earlier, and was awaiting the issuance of her discharge. I was amazed to find out that she had already received three solicitations in the mail and was inquiring about whether she should accept any of them. Unfortunately, this is how easy it has become to re-establish credit.
Practically speaking, I used to advise clients that it would take between 1-2 years to begin to re-establish credit. Now, I honestly don’t know. What I do know is that it will happen much sooner than you may have ever expected…..