How Long Does It Take To Re-establish Credit After Bankruptcy
How long will it take to re-establish credit after bankruptcy
? This is a question I receive by email often so I decided to make it the topic of our weekly article.
The consumer reporting act states that the bankruptcy will be completely removed 6 years from the date the bankrupt is discharged from bankruptcy.
Although a bankruptcy wont be removed the credit report for 6 years from the date of the bankruptcy discharge, some banks will extend a mortgage to a bankrupt who has been discharged for two or more years and has two or more years of re-established credit.
What is a discharge from bankruptcy? When an individual files for bankruptcy their property which includes income, assets and liabilities will become vested in the interest of the trustee in bankruptcy. The bankruptcy trustee is appointed by the Superintendant of Bankruptcy and administers the estate of the bankrupt.
The bankrupt will have to make monthly payments to their trustee, complete mandatory credit counselling and perform other obligations while undischarged from bankruptcy. In most cases, once the bankrupt has performed their obligations to their trustee they will obtain their discharge.
Once discharged it is always best to immediately start trying to re-establish credit. You may be thinking, how can I obtain credit to re-establish when I have a bankruptcy on my credit? A great starting point is to obtain a secured credit card. Capitol One Mastercard and Home Trust Visa both offer secured credit cards. You simply send them a deposit and you will receive a credit card with a limit equal to or less than the amount of your deposit. Your secured credit card will report to your credit report.
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