An experienced attorney can show you how to rebuild credit after bankruptcy. There is a common misconception that bankruptcy ruins a person’s financial future. Although a bankruptcy declaration can remain on your credit reports for ten years, it is important to note that you still have options under the law, and you can begin to rebuild your credit right away. An experienced bankruptcy attorney can assist you with rebuilding your credit and attaining financial freedom.
Getting Your Finances on Track
The first step to take after declaring bankruptcy is to get your finances on track. This typically involves setting a budget and showing lenders that you can manage your money effectively. Creating a budget and sticking to it goes a long way toward achieving financial freedom. You can also seek budgeting assistance with a non-profit credit counseling agency.
In addition to budgeting your money, you should work on building an emergency savings account separate from your ‘normal’ savings account. Ideally, in an emergency fund, you should have enough money set aside to cover your costs and living expenses in case of a job loss or inability to work due to a serious illness or debilitating injury. Having sufficient money in an emergency savings account can prevent your debt from spiraling out of control again.
Keeping Tabs on Your Credit Scores
You can check your credit report online for free on websites such as FreeCreditReport.com. Other online sources for credit scores include the following:
- Discover (which offers free credit scores even if you are not a Discover cardholder)
If you find incorrect information on your credit report, it is important that you dispute those errors and have them corrected, since your credit score is derived from the information on your credit report. If you are rebounding from a Chapter 7 bankruptcy, it is probably best to check your credit score on a monthly basis.
Availability of Different Types of Loans
For obvious reasons, lenders are not going to want to lend money to somebody if they do not believe that they are going to receive that money back in a timely manner. Despite declaring bankruptcy, however, you can make yourself more attractive to prospective lenders by providing assurances to them that they will not lose their money.
- Shared secured loan – The most common type of shared secured loan, typically offered through a credit union, is borrowing against money which is deposited beforehand and which you cannot access while the loan is pending. This deposit is used as collateral in case of a default on the loan.
- Secured credit card – This is a type of credit card account which is secured by a deposit which the borrower pays. The credit limit for the card is typically the amount which the borrower has deposited as collateral. Although the interest rates on these secured credit cards are oftentimes high, you should not need the card once your finances are in order.
- Co-signed loan or credit card – A friend or family member who has a good credit history may be able to co-sign on a loan or credit card for you. However, in the event of a default, the friend or family member could be on the line for the entire amount due.
Once you taken these steps and begin to build your credit, you should be careful to pay off your credit card balances on time (in full, if possible) and to keep your balances low.
Contact Us for Information About How to Rebuild Credit After Bankruptcy
For more information about how to rebuild credit after bankruptcy, contact Minneapolis Bankruptcy Lawyer Gregory J. Wald Attorney at Law at 952-921-5802.