While bankruptcy is an effective form of debt relief, it is not the ultimate answer to all financial problems, and it would be a lie to tell people that it doesn’t come with a bit of baggage attached. Individuals who have taken advantage of a bankruptcy filing may understand the wonderful debt relief and protection from creditor harassment that it brings, but being unable to pay one’s debt is something that could make future creditors nervous for years to come. This is especially true for people who filed for Chapter 13 bankruptcy and are still in the process of paying their debts off.

A married couple declared Chapter 13 bankruptcy, but shared their struggles in regard to obtaining credit such as the secured cards they tried to apply for. Most debt repayment plans under Chapter 13 are based on bills and income so that you can devote an adequate amount of your excess income toward paying off your debt. Because you will likely have little extra spending money for a while, many creditors will be hesitant to let you take on a credit card balance immediately. However, after months have passed and debts diminish, you can begin to see your credit score increasing.

While all of this may be true, it should not frighten you away or prevent you from taking advantage of Chapter 13 bankruptcy. The protection offered by Chapter 13 bankruptcy as well as the debt relief it provides are still just as desirable, and once you successfully repay your debt, you will have solid enough financial footing to establish good credit in the years following your bankruptcy.

Ohio residents should, of course, be concerned about their financial future following a Chapter 13 bankruptcy. The objective of the bankruptcy is to help people manage their debt and get a fresh financial start. Once you have that fresh financial start, you will be able to establish solid credit and rebuilt your financial base.

Source: Fox Business, “During Chapter 13 Bankruptcy, Secured Cards Tough to Get,” Erica Sandberg, May 6, 2014