Rebuilding Credit After Bankruptcy – Things You Need to Know

Now that the entire bankruptcy process is behind you, it is time to move on. Rebuilding credit after bankruptcy is one of the most important steps to returning to regular life after bankruptcy. The reasons you filed for Chapter 7 bankruptcy are inconsequential. It may have been medical bills, a divorce, loss of work, or simple overspending. Now is the time to prove to lenders that you will not end up in a dire financial situation again. The way to accomplish this is to rebuild a reputation of good credit. Here are some imperative things you should know about recovering following bankruptcy.

The rumor most commonly associated with filing for bankruptcy is that rebuilding credit afterwards-strong enough to be approved for a loan-is virtually impossible until seven years have elapsed. This is not true with the right implementation of tactics to rebuild your credit score quickly. Even before the seven-year period has intervened, some credit holders are able to obtain some of the highest scores possible. The key is responsible, consistent bill payments, month by month and year after year. Rebuilding credit after bankruptcy is a slow process to be sure, but if you pay off small purchases before you attempt to make large ones, your personal confidence will increase, as will the confidence lenders have in you.

Next, you must be wise about what you choose to get in debt for as you strive toward rebuilding credit after bankruptcy. Clearly you have had trouble with this in the past, so now that you are experiencing life after bankruptcy, you must make smarter decisions in this category. Start with small lines of credit from a grocery store or gas station. Always use a card when you may have used cash in the past. That way, you have the opportunity to pay it off and increase your credit score more quickly.

Making these changes is easier said than done, so you may want to purchase insurance on your debts. If you are unable to pay off your debts on your own for any reason, this ensures you will never be in the unfortunate position of filing for Chapter 7 bankruptcy ever again. Be sure to include the cost of the insurance with your regular bills each month. If you are ever faced with an inability to pay your bills again as you work at rebuilding credit after bankruptcy, you will find the safety net of the insurance there to catch you if you fall. law office offers Sacramento bankruptcy lawyer services. Nothing in this article should be construed as legal advice and only should be used for informational purposes only.

7 Steps to a Fresh Start after Bankruptcy

Bankruptcy is one option to consider in order giving yourself a “fresh start,” when you have more debts than you have assets. There are in fact many types of bankruptcy provided under the law but the most common is Chapter 7 bankruptcy, which is also known as liquidation.

When filing under Chapter 7 bankruptcy, all your assets, excluding those that are exempt under the law of your state, are dissolved and liquidated. Generally, the person tasked to do this is the court-appointed official, called a trustee.

All in all, the vital task of the trustee is selling your properties and using the proceeds to pay your creditors. After doing such, the court will then cancel many of your remaining debts, thus affording you a “fresh start” to life.

Here is a step-by-step guide to filing a bankruptcy under Chapter 7 bankruptcy:

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Can a Personal Bankruptcy Prevent You From Getting a Job?

Personal bankruptcy? Kiss your dream job good bye…

For quite some time, it’s been standard for financial, gaming and government employees to have their credit reports checked by their employers. After all, we don’t want criminals working in the government (insert your favorite joke here).

But now, the “Credit Police” are infiltrating other industries as well.

And what really irks me is, they don’t have the guts to just come out and say “We don’t want people with bad credit working for us.”

No, instead they’re using September 11th (911) and an increase in workplace violence as an excuse to check our credit reports. That’s pretty low.

Recently, pre-employment screening agencies have noticed a surge in requests for full background checks, which can investigate credit reports as well as criminal records, driving records, and employment and education history.

Alert Staffing reports that about 50 to 70 percent of all companies currently review credit reports, which not only reveal bankruptcies but also liens, judgments, and loan and credit card payment history.

Many companies simply believe that trustworthiness and creditworthiness go hand in hand. Personally, I think that’s a crock! I know lots of rich people with high credit scores, who I wouldn’t trust to watch Sparky, my pet goldfish, not to mention my money. On the other hand, I can list hundreds of people who’ve filed bankruptcy and have poor credit scores, who I’d trust my life with. However, most business owners believe how we handle things in our personal lives is a sign of how we would manage a company’s assets.

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Stacks of Credit Card Offers After Filing Bankruptcy

Under the new bankruptcy law, one can only file Chapter 7 bankruptcy once every 8 years. Before the new law, that number was 6 years. So, those who will obtain a bankruptcy discharge under the new law are now subject to MORE solicitation by the credit card companies.

Why? Well, now that you have recently gotten a discharge, the credit card companies know that you can’t file another Chapter 7 bankruptcy for 8 years. They have 2 more years of profits they can make off of you! It’s tragic.

This New York Times article published today tells the story well: Credit Card Offers Stacking up at Homes of the Newly Bankrupt

“As one of more than two million Americans who rushed to a courthouse this year to file for bankruptcy before a tough new law took effect, Laura Fogle is glad for her chance at a fresh start. A nurse and single mother of two, she blames her use of credit cards after cancer surgery for falling into deep debt.

Ms. Fogle is broke, and may not seem to be the kind of person to whom banks would want to offer credit cards. But she said she had no sooner filed for bankruptcy, and sworn off plastic, than she was hit with a flurry of solicitations from major banks.

“Every day, I get at least two or three new credit card offers – Citibank, MasterCard, you name it – they want to give me a credit card, at pretty high interest rates,” said Ms. Fogle, who is 41 and lives here. “I’ve got a stack of these things on my table. It’s tempting, but I’ve sworn them off.”"

The moral of the story is: It is important to learn to develop good credit habits after bankruptcy. It’s difficult to do that when you have all those credit card offers staring you in the face. Many of the cards will be at higher interest rates and you might end up in trouble again.

It might be wise to take a break from incurring new debt until you’re sure that can manage it.

Leon Rountree III
Consumer Bankruptcy Attorney

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Life after Bankruptcy

Bankruptcy will remain on your credit report for ten years. But you may be able to get credit fairly quickly – almost immediately after a bankruptcy – although you will pay dearly for it.

Due to anomalies in the credit scoring process, you’re likely to have a better score than you had while you were struggling with debt. Also if you handle debt responsibly from then on, you will find your credit score will be close to prime within a few years.

Credit scoring gives more weight to more recent events. So if you use of credit is down and you’re handling your debts responsibly, you score will go up. Remember you have to use credit to get a credit score.
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