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Rebuilding credit after a Washington D.C. bankruptcy

Those who have recently filed for bankruptcy may believe that their credit is ruined for the next 10 years. However, this is generally not the case. The key is understanding the specific bankruptcy that an individual filed for. For example, those who filed for Chapter 13 bankruptcy will see it come off their credit report after seven years instead of 10 years.

Regardless of the type of bankruptcy that a person files for, most lenders are only concerned about that person's recent credit history. Therefore, it may make sense to apply for a credit card soon after a bankruptcy is completed. A credit card also allows an individual to prove that he or she is able to use credit responsibly. In some cases, those who have just filed for bankruptcy may only be able to be approved for a secured credit card. Another option may be to be added as an authorized user on a friend or family member's credit card.

After filing for bankruptcy, it may be especially important to practice good fiscal habits. Making payments on time and using less than 20 percent of available credit will make an individual look more attractive to lenders. It is also a good idea for anyone to get an annual copy of his or her credit report to check for errors. These errors could reduce an individual's credit score.

Filing for bankruptcy may make it possible to get past consumer debts or reorganize payments on past due mortgages. Talking to an attorney who has experience handling bankruptcy filings may make it easier to determine which type of protections to seek. Some benefits to filing include a possible stay of foreclosure or other legal action after a Chapter 7 filing or the ability to keep property after a Chapter 13 filing.

Source: NerdWallet, "How to Rebuild Credit After Bankruptcy", Erin El Issa , December 27, 2014

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