Recovering From Bankruptcy
Recovering from a bankruptcy takes some time and some work on your part but is easier than you might imagine. After a bankruptcy, you probably think it will be almost impossible to obtain anything on credit or qualify for a loan ever again. The fact is that with on-time payments you can qualify for a credit card or a loan with a reasonable interest rate in as little as 12 months.
Filing a bankruptcy provides you with a fresh start so that you can put your financial problems behind you and start to establish good credit. This fresh start doesn't happen by itself. To get the best results, you need to be pro-active with your finances.
Here's how:
- Once you receive the Bankruptcy Discharge Order from the Court, send a copy of this Order, along with a copy of your bankruptcy petition and the list of creditors to each of the three credit reporting bureaus. The credit reporting bureaus have 30 days to make any corrections once they have received the information from you.
- About 60 days after you have mailed your bankruptcy papers to the credit reporting bureaus, obtain a free copy of each of your corrected credit reports by visiting www.annualcreditreport.com. Federal law allows you to obtain a free copy of your credit report from each of the three credit reporting bureaus on an annual basis.
- Pay your bills on time. If possible, pay them early so there is no risk of paying a bill late.
- Open up a checking and saving account. See if you qualify for an account at a credit union as the terms from a credit union are usually friendlier to consumers.
- Never take a payday loan or an auto title loan. The fees and interest are too high. It is very easy to get sucked in and again get into financial trouble. Once you have a payday or auto title loan, it is very difficult to repay it.
- Avoid loans from finance companies. Credit from a finance company is not good for your credit score. Not only is it very expensive, having finance companies appear on your credit report lowers your FICO credit scores (which makes everything else more expensive)
- Obtain a secured credit card. A secured credit card is where you deposit cash in an account and make purchases on the credit card up to the amount of the deposit. Each timely monthly repayment on the credit card will be reflected as a positive mark on your credit report.
- Be wary of "credit repair" scams. There is no way that any company can "wipe out" the negative information on your credit report – this includes the bankruptcy itself. These companies charge a lot and the negative information is still on your record.
- Create and actively use a good financial budget. It is one of the most important steps towards living within your means and bouncing back after bankruptcy. Boleman Law has created a Financial Management Guide that can assist you with creating a budget you can live with. To get your free copy e-mail ajscott@bolemanlaw.com and a copy will be e-mailed to you.
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Students from both private and public universities all over the country may also provide low cost or free advice. The sessions will only achieve directing clients to the right legal path in filing the right papers. Note that with the new bankruptcy laws taking into effect making the bankruptcy filing process more difficult than usual, an experienced bankruptcy attorney will be worth your money.
Many people who enter the bankruptcy process worry about the fate of their credit. This is actually unnecessary as the bulk of credit damage happens before the bankruptcy process is even initiated. While no one wants the added hassle of rebuilding their credit after resolving debt troubles, doing so can put you leaps ahead of others in the credit game.
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