Doctors, and Bankruptcy - what you need to know

Over the years we have helped several clients to improve their credit after filing bankruptcy. As a Doctor, you may be wondering how filing bankruptcy affects your credit. So here's what you need to know. First of all, bankruptcy is not something to be taken lightly. We usually counsel clients to only consider it as a last resort. Many times, if possible, it may be better to work out a debt settlement with your creditors.

However, sometimes an illness, divorce, or other life changing circumstances can be so overwhelming that bankruptcy may be necessary to turn things around and get your life back. That's why credit improvement after bankruptcy can be so important.

You may have a lot of unanswered questions about improving your credit after bankruptcy. So let's clear up a few misconceptions. Here's a list of questions we are sometimes asked by clients regarding bankruptcy and credit:

Will bankruptcy permanently ruin my credit?

Filing for bankruptcy will not permanently ruin your credit. After your debts are discharged, you can do credit repair after bankruptcy and reestablish your credit. Many people have eventually increased their credit scores greater than ever after filing bankruptcy.

Do I have to wait 10 years before I qualify for new credit?

Although bankruptcies can be reported by the credit bureaus for up to 10 years, generally you will not have to wait that long to qualify for new credit. Oftentimes, clients will get credit offers in the mail immediately after bankruptcy discharge. However, higher interest rates usually apply.

How can I avoid getting back into financial trouble after bankruptcy?

This is really a great question. When considering credit improvement after bankruptcy it's very important to assess what financial decisions led to your bankruptcy. You may then need to change how you manage your credit. Basically, it will be important for you to create a budget and learn to spend less than you earn. I know it sounds simple, but it's fundamental to staying financially healthy. We recommend that you use a good budgeting tool to help monitor your spending. The point is to develop new disciplines for managing your money and handling credit wisely. It might also be a good idea to develop a new "scoring friendly" payment policy for your practice to help optimize your credit scores.

Will bankruptcy keep me from getting a job?

More and more employers now use credit reports to screen employment applicants. However, by law they have to obtain your written consent to review your credit. Some employers consider filing bankruptcy to be a character issue and may elect to hire another equally qualified candidate. So if you are asked to give written authorization for a potential employer to review your credit, it may be wise to be pro-active and let them know you filed bankruptcy and explain your circumstances in advance.

Can I qualify for a car loan or mortgage loan after filing bankruptcy?

I know clients that have financed another car within 2 weeks of bankruptcy discharge. There are some lenders that will grant new credit immediately after bankruptcy. However, the interest rates are significantly higher than normal and the price of the car may even be above market value. But you can obtain financing for the purchase of a vehicle after bankruptcy. Bankruptcy will not keep you from eventually rebuilding your credit and qualifying for a new home. Many clients re-establish their credit and qualify for mortgage loans. Mortgage lending guidelines frequently change, so it's difficult to say how long it will take for you to qualify again. But you can improve your credit and optimize your credit scores after bankruptcy and qualify to buy a home.

Contact us today to schedule your credit check up!

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