Bankruptcy Attorney Discusses: Is It Possible to Rebuild Credit After Bankruptcy?
If you are considering filing bankruptcy, you may be asking yourself whether you can rebuild credit after bankruptcy. Many people mistakenly believe that filing bankruptcy ruins their credit for life. However, that could not be further from the truth. Too many debtors are fooled by this misconception. Instead of relieving themselves of their huge financial burden and stress, they continue to fall behind on their debt — and eventually find themselves facing a mountain of debt which is very difficult to overcome. By seeking legal counsel and discussing how to rebuild credit after bankruptcy with an experienced bankruptcy attorney, you will be in a much better position.
Make Sure Your Credit Report Is Correct Once Your Case Closes
After your bankruptcy attorney gets the case closed and your debt is discharged, you may think that now you do not have to worry about monitoring your credit reports for a long time. Unfortunately, that is not the case. Creditors don’t always update credit reports after filing bankruptcy. If you want your credit score to improve after your case closes, you should get all three of the major credit reports and review them thoroughly. You want to ensure that all of the debts the court discharged when you filed bankruptcy show up on your credit report as such.
If a debt that you discharged still shows up as an active debt, this can negatively affect your credit score until your report lists it properly. If you find that your credit report has inaccuracies, it is imperative that you contact the credit agency and inform them, as well as take any and all necessary steps to ensure that your credit report accurately reflects what has been discharged from your bankruptcy.
Can Secured Credit Cards Really Help Me Rebuild Credit After Bankruptcy?
A bankruptcy attorney will give you better insight by knowing your unique situation. Often, people who file bankruptcy make the common mistake of not getting a secured credit card immediately after their case is closed. Getting a secured credit card is one of the most successful ways to prove to a creditor that you can be responsible with money.
The secured credit card process is the complete opposite of that of an unsecured credit card. In order to use the secured credit card, you must pay a deposit that is equivalent to your spending limit. This deposit actually accrues interest while you are using it. The best part about having a secured credit card is that you are able to use whatever is currently on your limit to pay off the balance. This will ensure that you do not fall too far behind. The creditor has the right to use the limit to pay down your card as well. As a result, no late fees or other negative history will be associated with your credit.
Make Sure You Use Your Secured Credit Card Correctly
In order for you to use a secured credit card to rebuild credit after bankruptcy, the creditor must list the secured credit card as an active debt on your credit report. You must ensure that the creditor who issued you the card reports the debt to the appropriate credit reporting agencies so you that get credit for using the secured credit card. Also, you will want to look at the limit before opening the account. If the limit is at or under $300, it will not be of much use to you as it will not help your credit very much. If it is above that number, then your credit score should receive a nice boost.
Another important thing you should do is to use the secured card on a monthly basis. In order to build a positive history of credit use, you must have a trail of credit history showing that you regularly use your credit card and pay your bill on time every month. The best way to do this is by paying the card off every month. If you are using the card correctly, for groceries, gas and other necessities, it should not be too difficult to pay the entire balance off. If you are unable to do that, you must pay the required amount owed every month to ensure that your credit score only goes up, not down. You should also try not to use too much of your available credit (no more than 30 to 35%) or that can cause your credit score to fall.
Pay All of Your Bills in a Timely Manner
If you get the right bankruptcy attorney, you can discharge many of your previous debts. With your bankruptcy case discharging all of your previous debts, your financial future should be bright. Most people who file are able to start fresh and take steps to make sure they are never in that bad of a financial position again.
The bills you receive on a regular basis post filing can also help to rebuild credit after bankruptcy. Without the added pressure of having to pay a massive amount of debt spread across numerous creditors, you should be able to better focus on paying your monthly bills. Furthermore, by reorganizing your finances, you will have a much more organized and streamlined approach to paying in a timely manner. Debts that you can pay much more easily are your rent, electricity and other utility bills, as well as your cell phone bill. If you leave those debts unpaid, this can have a huge negative effect on your credit.
Reaffirmed Debts Will Help You Rebuild Your Credit
In addition, you may have reaffirmed some of your debts in your bankruptcy case. Some examples of reaffirmed debts include mortgages and car payments. These debts stay on your credit reports after bankruptcy because you reaffirmed them, and they are one of the most effective tools you can use to rebuild credit after bankruptcy.
Stick to a Budget
Another way to help rebuild credit after bankruptcy is to have a monthly budget for yourself and your family. If you stick to this budget, you will not only find yourself with more liquid cash at the end of the month, but also have fewer bills from annoying credit card debts. Most people who find themselves in financial trouble do not have monthly budget plans, or do not stick to the plans. If you stay disciplined and don’t spend above your means, you will be able to rebuild your credit and never have to be in the position to file bankruptcy again.
Learn More About How to Rebuild Your Credit After Bankruptcy
If you are considering bankruptcy, bankruptcy attorney Steve Holland can assist you with the bankruptcy process from beginning to end. He will also advise you on how to rebuild credit after bankruptcy. Call Holland Law Office P.C. today to get started.