How to Rebuild Your Credit

The Bankruptcy and Debt Relief Law Firm

At the bankruptcy and debt relief law firm of Ammerman & Goldberg, we are dedicated to helping people in Washington D.C., Maryland, and Northern Virginia resolve financial problems using Chapter 7 and Chapter 13 consumer bankruptcy laws. We then work with them to help rebuild their credit.

Today the stigma of bankruptcy has been considerably reduced. While a bankruptcy remains on your credit record for 10 years, you can take steps to reestablish your credit the day your debts are discharged. A majority of our Chapter 7 and Chapter 13 bankruptcy clients can finance an automobile soon after receiving a discharge. Many people begin receiving credit card solicitations within months of their bankruptcy discharge.

The Washington D.C. bankruptcy attorneys at Ammerman & Goldberg have a wide variety of techniques to help our clients reestablish their credit after bankruptcy. Some steps our clients can take include:

  • Opening a checking and savings account. Many lenders check bank accounts
  • Pay your mortgage, rent, secured credit cards, and utility bills on time. These are often used by lending companies to determine whether or not to lend money.
  • Apply for a secured card. These are credit cards where you deposit cash and charge against it.
  • Apply for credit cards at stores where you would normally pay cash.
  • Have a friend or relative co-sign a loan and then make monthly payments on time.
  • Buy a used car from a bankruptcy friendly car dealer. Also, try finding a bankruptcy friendly mortgage broker to refinance your home.
  • Avoid high interest payday loans. These are credit traps and can lead to a circle of debt.
  • Write letters to every credit reporting agency. Explain why you filed for bankruptcy and what you are doing to avoid credit problems in the future.
  • Keep your debt to income ratio low. Do not let your consumer debt exceed twenty percent of your disposable income.
  • Live within your means.
  • Pay your reaffirmed, pre-bankruptcy, and, for Chapter 13 bankruptcies, consolidated debt payments on time.

If you live anywhere in the District of Columbia, Maryland, and Northern Virginia, please contact our bankruptcy attorneys or fill out our Free Bankruptcy Evaluation Form. We are committed to helping our bankruptcy clients throughout the bankruptcy process, including giving legal advice regarding rebuilding credit after a bankruptcy discharge.

Our bankruptcy law practice represents clients throughout the District of Columbia, Maryland, and Virginia, including Silver Spring, Bethesda, Rockville, Landover, Greenbelt, Bowie, Upper Marlboro, Arlington, Alexandria, Falls Church, Vienna, Fairfax, and Washington D.C. including Prince George's and Montgomery counties.

Chapter 7 - An Overview

Both individuals and small businesses can find themselves with more debts than they can pay when due. In such cases, filing bankruptcy may provide a solution to what seems like an insurmountable problem. Bankruptcy law provides two basic forms of relief: (1) liquidation; and (2) rehabilitation, also known as reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. A skillful attorney can advise individuals and businesses alike on whether Chapter 7 may be the right choice for them. The bankruptcy lawyer's goals are to help debtors make a fresh start and ensure that creditors get paid.

Because bankruptcy law is primarily federal in origin, it varies little from state to state. The individual states do, however, retain jurisdiction over certain debtor-creditor issues that are not addressed by and do not conflict with federal bankruptcy law, such as which property remains exempt from creditors' claims.

Debts that Remain After a Chapter 7 Discharge

The rules on which debts are discharged, or eliminated, are different depending on which type of bankruptcy is filed. A lawyer experienced in bankruptcy law can advise his or her clients on whether and how particular debts will be affected by a bankruptcy discharge. Generally speaking, in a Chapter 7 proceeding, the following debts are not discharged.

What is a "Discharge" Under Chapter 7?

"Discharge" in the bankruptcy sense refers to clearing the debtor's slate of all, or most, past debts. Although many people expect that filing bankruptcy will wipe out all of their debts, that is not always the case. Bankruptcy only discharges certain debtors of certain debts. The availability of discharge depends on the type of bankruptcy proceeding involved, who the debtor is, and what type of debts the debtor has. An experienced bankruptcy attorney can advise his or her clients as to which debts will be discharged by a Chapter 7 bankruptcy and which debts will remain.

Exempt vs. Non-exempt Property Under Chapter 7

In a Chapter 7 liquidation case, the debtor has to turn certain property over to the bankruptcy trustee so that the property can be sold and the proceeds used to pay off debts. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up. Experienced bankruptcy lawyers can answer these and other questions, allay fears, and keep the process moving forward as painlessly as possible.

Non-Bankruptcy Workouts

The term "workout" is used to describe a non-bankruptcy negotiated modification of debt. More simply stated, a workout is an agreement worked out between a debtor and his or her creditors for repayment of the debts between them, which is negotiated without all the procedural complications-and perhaps the stigma-of the bankruptcy process. Lawyers experienced in bankruptcy and debtor-creditor law can advise both debtors and creditors on whether a non-bankruptcy workout may be their best course of action.