The bankruptcy petition that you file may affect the timeframe determining when you may begin applying for new credit. Before applying, however, your existing debts require a discharge, which occurs as soon as a judge signs a court decree.
As noted by Forbes magazine, if you qualify for a Chapter 7 bankruptcy, the process may take between four to six months to complete and result in a discharge. After filing your petition with the court and attending a creditors’ meeting, it may take up to 90 days to receive your discharge.
When may it take longer than six months to receive a discharge?
Certain debts that you include in your petition may take additional time to discharge through a Chapter 7 filing. If, for example, you have a co-signer or share joint accounts with your spouse, a creditor may require additional information. Under certain circumstances, outstanding taxes or other government obligations may also prolong your case.
When you file a Chapter 13 bankruptcy, the trustee approves of a payment plan that may take between three and five years to complete. Based on your monthly income, you make payments on your debts, and after you complete the payments, your creditors forgive the remaining balance. You may not, however, apply for a new credit card or loan during the term of the payment arrangement.
What financial arrangements may help rebuild a credit score?
An auto loan may help boost your credit score after your discharge, and you may wish to hang on to your car during a bankruptcy. If it is possible for you to continue making on-time monthly vehicle payments, staying current may add positive points to your credit report. A secured credit card may also help by providing a record of making on-time payments.