What to Expect After Bankruptcy: Rebuilding and Moving Forward

This article is part of a comprehensive guide to bankruptcy in Oregon. Go here to read the guide and see related articles.

Filing for bankruptcy can give you a fresh start, but what happens next? This guide explains:

1. How bankruptcy affects your credit.
2. The steps you can take to rebuild your credit. 
3. What to expect when applying for loans, renting an apartment, or buying a home.
4. Other frequently asked questions. 

How long does bankruptcy stay on my credit report? 

How long bankruptcy remains on your credit report depends on which kind of bankruptcy you file: 

• If you filed for Chapter 13: 7 years from the date you file 
• If you filed for Chapter 7: 10 years from the date you file 

Even though bankruptcy stays on your credit report for several years, many people begin rebuilding credit much sooner. 

How to start rebuilding credit after bankruptcy 

You can take steps to rebuild your credit after bankruptcy: 

• Make on-time payments: Paying rent, utilities, and any remaining loans on time helps improve your credit score.
• Use a secured credit card: A secured card requires paying a deposit and can help rebuild credit if used responsibly.
• Keep debt low: Avoid loans or credit offers with high interest rates that could put you back in debt. 
• Check your credit report: Make sure all your erased (discharged) debts are correct on your credit report. 

Building good financial habits can help you regain stability and qualify for new credit over time. 

Getting a loan or buying a home after bankruptcy

Many people qualify for loans after bankruptcy, but it may take time to rebuild credit. Lenders consider several factors when deciding whether to lend money:

• Chapter 7 history: Because you can't file and erase your debts again for several years, some lenders may see you as a lower risk after a Chapter 7 bankruptcy.  
• Chapter 13 history: Completing a repayment plan shows lenders you can handle making regular payments.
• Your current financial habits: Keeping debt low and making on-time payments will help improve your credit.

Car loans 

Some lenders offer auto loans soon after bankruptcy, but they may have higher interest rates. Waiting until you've improved your credit may help you get a loan with better terms.

Mortgages  

You may qualify for a mortgage within 2 – 4 years after bankruptcy, depending on the type of loan: 

• Government-backed loans have shorter waiting periods and may be easier to qualify for. Examples of these include 
  • Federal Housing Administration loans, called FHA loans
  • Veterans Administration loans, called VA loans
  • U.S. Department of Agriculture loans, called USDA loans
• Conventional loans (not backed by the government) often have stricter requirements and may require a longer wait. 

Saving for a down payment can help you qualify for a loan. 

What financial mistakes should I avoid?

After bankruptcy, it's important to stay on track financially. Be cautious about: 

• Taking on too much new debt too soon. High-interest loans and credit cards can make it harder to rebuild. 
• Missing payments. Paying bills on time is one of the fastest ways to improve your credit. 
• Ignoring your credit report. Make sure discharged debts are correctly reported. 

Summary and next steps 

Bankruptcy gives you a fresh start, but rebuilding your finances takes time. You can improve your financial situation by making on-time payments, managing debt wisely, and checking your credit report.

FAQs About What to Expect After Bankruptcy