Are you wondering about the aftermath of bankruptcy?  What happens to your credit after bankruptcy?  Have you consulted an experienced Arizona bankruptcy attorney?  

Life after receiving your discharge for a Chapter 7 or Chapter 13 bankruptcy can be relieving but also confusing. You may be wondering what to do now and how the bankruptcy has affected your life, including your credit score.

What happens to my credit after bankruptcy?

Many people are concerned about rebuilding their credit scores after filing bankruptcy and receiving a discharge. This concern probably stems from the thought that credit consumer reporting agencies will report a bankruptcy case on a credit report for about a decade.

Credit consumer reporting agencies are governed by the Fair Credit Reporting Act, codified in 15 U.S.C. Section 1681. Frequently Asked Questions, azb.uscourts.gov, http://www.azb.uscourts.gov/?PID=14 (last visited Feb. 16, 2014). Generally, the reporting agencies remove most negative information after about eight years and they definitely cannot report a bankruptcy case on a credit report after ten years. Id.  The Bankruptcy Court does not notify credit consumer reporting agencies about a bankruptcy case. Id. Rather, any reports given to such reporting agencies have been by your creditors and gathered by public sources the reporting agencies use. Id.

How will bankruptcy affect my employment?

The Bankruptcy Code has built in protections to shield you from employment discrimination in public and private sectors. Arthur W. Rummler, Life After Bankruptcy: Post Bankruptcy Protection From Employment Discrimination, 24 DCBABR 26 (Jan. 2012); 11 U.S.C. § 525. For example, §  525(a) of the code prevents the government from discriminating against a debtor by denying employment or terminating employment because of bankruptcy, among other things. Id. at 27. This protection extends only to individuals, partnerships, and corporations in the public sector. Id.

While bankruptcy debtors employed in the private sector do not receive the broad protections of § 525(a) of the Bankruptcy Code, they are covered by § 525(b). Id.  This section protects a bankruptcy debtor from employment discrimination solely because the debtor is or has been a debtor, insolvent before bankruptcy, or has not paid a dischargeable debt. Id.

To learn more about how the Bankruptcy Code applies to your employment situation, contact an experienced Phoenix bankruptcy attorney.

How can I rebuild my credit safely?

There are several ways to get back on the right track with your credit. One important thing is to keep track of your budget and to put some money aside as a cushion.

Keep Track of Your Credit Reports

It is best for you to keep track of your free credit report from any of the three credit reporting bureaus; Equifax, Experion, and TransUnion. Once you obtain your credit report, make sure to look through it and to call and dispute anything that is incorrect about your current financial condition. The Fair Credit Reporting Act has procedures in place for disputing incorrect information on your credit report, and the challenge is made directly to the credit reporting agency. Arthur W. Rummler, Rebuilding a Bruised Credit History: Statutory and Practical Considerations, 26 DCBABR 24, 25 (Dec. 2013).

Small Loans

Although credit cards from high risk credit card companies may be tempting, it’s a better option to build your credit back up by applying for a secure bank loan after depositing the money into a trusted bank or credit union savings account. Rummler, 26 DCBABR at 25.  It is an important step to ask around for the right bank or credit union and to get to know the banker. Arthur W. Rummler, 26 DCBABR at 29.  The loan amount should be small. If you set the savings account to automatically repay the loan each month and plan for a little extra to pay off the monthly interest on the account you should be well on your way to rebuilding credit. Continue this process with small loan amounts until you can afford to increase to larger amounts. How To Rebuild Credit After Bankruptcy, wikihow.com, http://www.wikihow.com/Rebuild-Credit-After-Bankruptcy (last visited Feb. 16, 2014).

Secured Credit Cards

A secured credit card is another option. These credit cards are real credit cards but work like debit cards because you pay the bank the money beforehand. See Rummler, 26 DCBABR at 29.  However, the benefit is these payments are reported to major credit consumer reporting agencies to reflect on your credit score. How To Rebuild Credit After Bankruptcy, wikihow.com, http://www.wikihow.com/Rebuild-Credit-After-Bankruptcy (last visited Feb. 16, 2014). Eventually, after a good track record, you may be able to ask for an unsecured card with the same bank. Id. The important thing is to pay off your full balance every month and to budget so you only charge what you can afford.

If you have any questions about restoring your credit after bankruptcy, contact one of the skilled Phoenix bankruptcy attorneys of Ariano & Reppucci, PLLC today. We offer free consultations and affordable rates to residents located throughout Arizona.

If you have any questions about repairing your credit contact our experienced Arizona bankruptcy attorneys for more information.