Answers To Popular Questions

How long will bankruptcy stay on my credit and will I get credit again? And even if I don’t ever want to see a credit card again, can I buy a house in a couple of years.

The short answer is that a bankruptcy filing will stay on your credit report for 7 to 10 years.

BUT you will get credit card offers right away. A recent law school law review article stated that on average after you receive your bankruptcy discharge (no later than when your case is closed) you will receive an average of 14 credit card applications per month for the next 12 months. Generally, the offers are sent from the same lenders who claim you will not get credit if you file bankruptcy.

AND There are home lenders and car dealers that will put you into a nice new home or car right away at reasonable interest rates.

How is this possible?

It is all because of the way credit works in this country.

At one time, prior to 1999, when you wanted credit, you went to the bank or lender and filled out an application, a credit report was done and the lender decided whether or not to lend you its money.

Not any more. Everything changed with the repeal in 1999 of the Glass-Segall Act which had been passed into law after the great depression to keep separated banks and investment companies on Wall Street.

Today, with the repeal of the Glass-Segall Act, banks sell their loans and credit card purchases to debt buyers who then bundle them into bonds, cut them up into smaller bonds and sell them on Wall Street. The funds are called collateralized debt obligations (CDOs) and mortgage backed securities (MBSs).

In essence when you apply for a credit card, loan, home loan, etc., the lender gives you the credit on paper and then makes its profit from selling off your promise to repay the purchase or the loan.

The Lenders who will give you new credit after bankruptcy have nothing to lose and everything to gain by giving you the new credit. The lenders make their profit in selling off your promise to repay the credit card purchase, car loan or mortgage to the debt buyers on Wall Street.

< Back to Answers To Popular Questions