Credit After Bankruptcy
Under Credit After Bankruptcy+ Life After Bankruptcy
Despite what you may have been told, credit after bankruptcy doesn’t have to take ten years. You can start building your credit right away and be in good standing in as little as two years.
The first thing you need to do is fix the problems that got you into troubled waters in the first place. If one problem was overspending then it’s time to build a realistic budget and spend within what you make monthly. If you had lost your job and not been able to pay for things, then let’s work on building up an emergency fund. The last thing you want to do is take the time to build up a strong financial history only to end up in another financial crisis and having to declare bankruptcy again a few years down the line. The next thing to do is check your credit report for mistakes. Your score is based on information in the report. You want to make sure that everything included in the bankruptcy is marked as such. If not, you need to call the company and keep calling until this is changed. Accounts marked as open or overdue will hurt all of your positive efforts so it’s important this is taken care of. Once these problem areas are taken care of you’ll want to focus on building up a positive history. There are two ways you want to do this: installment payments and revolving payments. Installment payments would be some kind of loan, like for college, a car, or a mortgage. Revolving payments are credit cards or home equity lines of credit. If you didn’t discharge a mortgage loan, then you are set! Just remember to make timely payments. Otherwise, consider an auto loan or other financing options. For revolving payments, if you aren’t interested in securing home equity lines of credit, then I suggest looking at secured credit cards. These work just like other cards, with monthly payments, but you put a few hundred dollars into an account for the length of the card, typically 12-18 months, and that money secures your card. You can usually find these at your bank.
There are some important things to keep in mind when searching. Only use 30% of your credit limit and always pay the card off in full every month. Call the company before you apply and make sure they report to the three major bureaus, Experian, Equifax, and TransUnion. If they don’t the card does you no good.Make sure the card will become unsecured after 12-18 months of timely payments.You should NOT have to pay an application fee and the annual fee should seem reasonable. You may want to compare fees at several banks.
With all of this going for you, after two years you should be in good standing. Even though past problems won’t fall off your report for a good deal longer you can still have good credit after bankruptcy.
By Jennifer
Under Credit After Bankruptcy+ Life After Bankruptcy
What do you do now that it’s all over? There’s an anticlimactic feeling to being done discharging your debts. It’s supposed to be all over, you’re supposed to be free, but how to live after bankruptcy? What do you do now to move on and get your life going again? There are a number of things you can do to move forward.
The first thing to start working on is letting go of your feelings about everything and coming to terms with all that has happened. Often, there was some big event (like a divorce, medical issue, natural disaster, etc) that happened before you wound up in your bad financial situation and then had to go through the process of discharging your debts. This hasn’t given you much time to deal with your emotions. If you are feeling guilty, ashamed, or embarrassed it can keep you feeling scared to make any financial moves. If you’re too scared to do anything financial you’ll never rebuild your credit and be free of all of this.
The next thing to do is start setting up an emergency fund. Set up an initial one of about fifteen hundred dollars so that if anything comes up (flat tire, broken water heater, emergency vet bill) you don’t need to do something like charge up a credit card or get a loan—otherwise known as go into debt. Whenever you have to borrow from this fund, replenish it.
Whenever you have to apply for anything there is one good rule that’s good enough to repeat: shop around, shop around, shop around. Always shop around and read through the terms and conditions anything so that you thoroughly understand anything you are signing up for. A lot of companies that are willing to work with people who have risky credit histories hide large fees in the terms and conditions. This goes for pretty much anything from loans, cards, insurance, and rentals (cars or apartments).
Always have money ready to go for deposits. There is usually a large deposit or collateral associated with any new accounts you open in your life after bankruptcy.
Use some of that deposit money to get secured cards and loans to rebuild your credit. You should work on building up your credit as soon as possible. In the first two years it is important to build a plan and do what you can so that in the years following things will be easier for you. In just a few years you can have an acceptable rating and be able to do things more easily—it doesn’t have to be until your bankruptcy falls off that things get easier for you.
Check your credit report often. This is something everyone should do really, but it’s more important when you have a bad rating and are working on improving your situation. A month or so after things are settled make sure that things were actually marked as included in bankruptcy and not late—and if they’re not marked correctly call companies and keep on them until they do it.
Just because things have changed doesn’t mean you can hide. Adjust, figure out how to live after bankruptcy, and get on with your life.
By Jennifer
Under Credit After Bankruptcy+ Life After Bankruptcy
Credit cards after bankruptcy will be different than before, but that doesn’t mean you shouldn’t use them.
You won’t be able to find an unsecured card right away, but that’s ok. With a focused plan you can set the goal to be in good financial standing in two years, and this is an important part of a plan. The thing you have to do in these two years is show that you can be trusted to make payments and not get into debt problems again. Your history makes you a risk for companies, so you need to build two news years of positive history. Because you are obviously not the only person in this situation, there are products made specifically with this in mind. Banks and other financial institutions have secured cards. You deposit some money, typically a few hundred dollars, into a savings account which secures things for the bank. You use it just as you would an unsecured one, but with a much lower limit. This makes you less of a risk for the company.
When you go to look at credit cards after bankruptcy there are a few things to keep in mind. First of all, you want to make sure there are no application fees and the annual fees seem reasonable so do compare between companies. You need to ask to make sure that the company does report to the three major credit bureaus; Experian, Equifax, and TransUnion. If they don’t do this you are wasting your efforts, so go elsewhere. The last item of importance is to make sure that after 12-18 months of timely payments you have the option to switch to an unsecured deal. On your end, you need to make sure you use it lightly, and pay your balance monthly. This can be a hard pattern to get into if you’ve never done it before, but it will do good things for your credit.
Things are undeniably different for you now, but you don’t need to hide away from your finances. Take control and have a plan for credit cards after bankruptcy.
By Jennifer
Under Credit After Bankruptcy+ Life After Bankruptcy+ Mortgage After Bankruptcy
In order to get your credit problems behind you quickly and move forward with your life build a thorough two year after bankruptcy plan. With a thorough plan you can move forward much sooner than before it actually falls off your credit report. Rebuilding your credit is going to take a lot of persistence, but as long as you stay on top of it, you can make some big improvements with some simple credit building tips.
The first thing you need to do, about a month after you’ve finally discharged your debts, is get a copy of your credit report. You need to make sure that all of your past debts have been marked as “included in bankruptcy” and not open, late, etc. This is very important. Many companies will fail to fix this because they have no real motivation to take care of it, but with it still on there it looks as though you had a bankruptcy AND still more debt. You need to call the companies and if they are not on top of things you need to ask to speak to managers, send a written request, and possibly just keep calling until it’s done. This is unpleasant, but very important.
Put together an emergency savings account with at least $1,500, and keep it replenished over time. This will keep you out of trouble when life’s unexpected problems come up, especially because of how hard it will be for you to get any kind of outside financing now.
Once you have the funds to do so, get a secured credit card. You can get these at most financial institutions. This will take some money, as you have to put some funds into a savings account that you can’t touch for between 12 to 18 months, but is a wise financial move that will really get the ball rolling for your two year after bankruptcy plan. This is one of the fastest, easiest, best things you’ll do to improve your credit.
Eventually, possibly a year later, get a small loan. It will be easiest to get a secured one, but you’ll have to go with what you’re able to do. It doesn’t really matter what it’s for (school, a car, etc) just that you’ve gotten a small amount of financing and pay it back with all of your payments on time. If you have a difficult time doing this, look into CD secured loans–this will require you to have some money available to buy a CD (certificate of deposit) but when all else fails, this is an easy option for getting loan approval.
During all of this keep an eye on your credit report and always keep working on building up a history of healthy financial accounts. The more on time payments, the more healthy activity over time, the higher your score will be and more willing people will be to work with you. In as little as two years after bankruptcy, with a good plan, you can have a good score and have an easier time financially.
By Jennifer
Under Credit After Bankruptcy+ Life After Bankruptcy
As with everything else involving your finances, renting after bankruptcy is going to be very different than it was before.
The first thing that you need to be aware of is that you are most definitely going to have to pay a very large deposit. You will probably be asked to pay enough to cover last months rent plus an additional security deposit amount. You’ll want to know this ahead of time so you can make sure you have that much saved. This money should be refundable at the time you move out. Despite this large deposit, you are still going to have a hard time finding a rental, particularly depending on how recent your bankruptcy was. The more recent your discharges, the harder it will be. That doesn’t mean it’s impossible though (even though that’s sometimes how it will feel).
The problem is that most big companies will have policies that are going to rule you out, and they aren’t going to be willing to consider going around them. They simply aren’t interested in working with you. To get around this, you want to look elsewhere–look for an individual renting out their property who is going to be okay renting after bankruptcy. Be up front with this person from the get go so that you don’t waste your time or theirs. Tell them you have a bankruptcy in your past. If you have a good rental history (clear of evictions) tell them that. If you can, get some letters of reference from past landlords. You probably won’t be accepted at every individual landlord (and they are getting harder to find these days) but eventually someone should look at your situation and be willing to work with you.
To find individual landlords, look both online on websites like craigslist and your online local newspapers classifieds. Also look in print on your local newspapers classifieds, as often these ads are different. A lot of individual owned rentals are run by people who do things the old fashioned way, so print papers are a good resource. You can also drive around your town and look for some “for rent” signs yourself. Another way to find a place is to ask around, ask your friends, post on your social networks–these people may have rented from a great guy before and be able to send a lead your way, and you could then use your friend as a possible reference to get in the door with your prospective landlord.
As with all experiences after bankruptcy, keep in mind that the more you do to improve your credit in the years following the discharge, the easier renting will become for you.
By Jennifer
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