Bankruptcy Attorney | Rebuilding Credit After Bankruptcy
Bankruptcy Attorney . Filing for bankruptcy with a bankruptcy attorney is never an easy decision, and it is one that can have far-reaching consequences for your financial future. However, despite common misconceptions, bankruptcy is not the financial nightmare that many believe it to be.
There is no denying that a fresh bankruptcy can limit your access to credit, and can make it more difficult to obtain credit, particularly for big-ticket items such as home mortgages. Because of this, the first step towards recovering your financial future after declaring bankruptcy is to rebuild your credit rating, which can be a far easier process than you may think.
It is important to keep in mind that there are no shortcuts in rebuilding your credit. Consumers do not decide on a whim to declare bankruptcy – the financial missteps or misfortunes that culminate in bankruptcy usually happen over a period of time – and recovering your credit rating after bankruptcy will also take some time. The secret is to take it slowly and methodically, and to avoid the many scams, such as credit repair services, that prey on consumers who are trying to rebuild their credit.
Here are a few steps you can take to start rebuilding your credit after bankruptcy:
Start with the Basics
The most important step you can take in rebuilding your credit is to simply get a firm grip on your money and your expenses. Your bankruptcy attorney will advise you to set a budget, and stick with it. Keep a daily log of how much you spend, and on what. This one simple step can help you see exactly where your money is going, and help you decide if you are spending money on the right things. This will help you quickly gain insight on how to develop good spending habits and essential money management skills.
Get a Secured Credit Card
One of the great paradoxes of credit is that in order to get credit, you need to use credit. The catch is you must not just use it, but use it responsibility. A secured credit card is simply a credit card on which the potential debt is secured by a deposit kept in escrow by the issuing financial institution. Secured cards generally require that you deposit with the issuing institution 50 to 100 percent of the credit line available on the card. This money is kept by the financial institution as ‘good faith’ money that guarantees that the credit card holder will honor the debt. If you use the card responsibly for a pre-determined period of time as set by the issuer, this can gradually help you rebuild credit.
Never Charge More Than You Can Pay Back in a Month
Once you have a secured credit card, it is vitally important that you never charge more than you can afford to pay back in a month. You should strive to never carry a credit card balance from month-to-month while in this critical credit rebuilding state. It would simply be too easy to allow the balance to grow and grow beyond your ability to pay. For the same reason, it is vitally important that you never charge more than thirty percent of the available credit line. For instance, if the card has a limit of $500, you should never have a balance higher than $150 –and you should always pay off the balance every month.
Pay Your Bills on Time
It is extremely important that you pay every single bill on time. Mortgage payments, utility payments, car loans – every bill must be paid on time every month. While it is of course important that everyone pay their bills on time, it is critically important that anyone trying to rebuild their credit after bankruptcy be extra vigilant about paying their bills. A derogatory comment on your credit report or a collections action over an unpaid bill could have a devastating effect on your efforts to rebuild your credit.
Keep a Close Eye on Your Credit Report
Immediately after your bankruptcy has been discharged you should get a copy of your credit report and make sure all the debts that should have been covered under the discharge show a zero balance. If you find any discrepancies, report them immediately to the creditor and the agency that issued the report. Under the federal Fair Credit Reporting Act, you are entitled to a free copy of your credit report each year from each of the major credit reporting agencies – Equifax, TransUnion, and Experian. Take advantage of these free reports to make sure your report is always up-to-date and accurate. -startfreshtoday
Are you in need of a fresh start? Contact an experienced bankruptcy attorney. Contact the credit rebuilders and bankruptcy experts at Pinkston & Pinkston.