Consumer Bankruptcy, Credit, Credit Score

How to Repair Credit History After Filing for Bankruptcy

Once a consumer has filed for bankruptcy, he or she will almost certainly notice a drop in their credit score. This drop is to be expected, and while it does temporarily affect a person’s credit, it is by no means permanent. In fact, with good financial habits a consumer can rebuild his or her credit to better than it was before filing for bankruptcy.

Following the closure of the bankruptcy case, certain steps can be taken to bring that credit score back to where it once was or even higher.

Bankruptcy Law

The Fear of Bankruptcy is What Keeps Many Consumers from Filing

The fear of the unknown is a powerful force. Unfortunately, the fear of filing for bankruptcy and the unknown keeps many from proceeding with a bankruptcy case, even when it is the best option.

It is for this reason that only a small portion of American consumers file for bankruptcy annually, even though many of them could benefit from either a Chapter 7 or Chapter 13 bankruptcy filing. While many different reasons exist for this failure to file, a misunderstanding of the process and fear of taking that first step keeps them from moving forward.    

Bankruptcy Law, Credit Score

Tips for Rebuilding Credit After Bankruptcy

Filing for bankruptcy allows people to get a fresh start financially and erase past debts, but a legitimate concern many consumers have is the effect it will have on their credit score and their ability to take out credit, again.

One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future.  To the contrary, after filing for bankruptcy you can begin restoring your credit right away.

Bankruptcy Law, Credit Score

Tips to Help Seniors Bounce Back from a Bankruptcy Filing

With the rising costs of health care and inflation, it is not uncommon for seniors to seek bankruptcy relief. Although bankruptcy can remain on a filer’s credit report for seven to 10 years, depending on the type of bankruptcy, there are certain steps seniors can take to boost their credit score during this period.

Prepare a Budget

One of the most important steps a senior can take after filing for bankruptcy is to prepare a budget. Many agencies, including the AARP Foundation, will work with the senior to prepare one. Most seniors live on fixed incomes, which leave very little room for unexpected expenses, such as large medical bills or expensive home repairs. However, if senior consumers can put together a plan that gives them leeway to pay for the unexpected, this budget will help them prevent falling into the same financial situation, again.

Bankruptcy Law, Credit

Tips for Renting an Apartment After Bankruptcy

Filing for bankruptcy gives individuals a financial fresh start, relieving the stress of debt and collection calls.  However, declaring bankruptcy can add some additional obstacles to the apartment- hunting process, but not to worry: You can rent an apartment after declaring bankruptcy.  It comes down to the application process, and we have some important tips for you.

Honesty Is the Best Policy.

It can be tempting to want to hide the fact that you recently filed for bankruptcy, but unless the apartment or rental home is a property that does not require a credit check for rental applications, this fact will be discovered quickly. The last thing an applicant wants is for the landlord to find this out after the fact before the renter has any chance to explain the situation. If a bankruptcy is on the individual’s history, it is best to be upfront from the beginning. Honesty is the best policy.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

How to Improve Your Credit After Bankruptcy

The decision to file for bankruptcy is a tough one to make, but it is often the first step in gaining control of your financial future. A common concern people have when filing for bankruptcy is the effect it will leave on their credit score and their ability to access credit, again. While bankruptcy does affect your credit score, it is sometimes the last resort to rebuild your credit and your life.

In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “fresh start.”  Here are some quick tips to help rebuild your credit after filing for bankruptcy.

  1. Pay Your Bills on Time. Take full advantage of your financial fresh start. Make consistent and timely payments on all of your bills and any remaining debts moving forward, like your mortgage and car payment. These consistent payments over time will help improve your credit score and re-establish your credit.
  2. Monitor your Credit Report. Make sure and check your reports every few months for errors. Confirm that any negative marks (i.e. – your discharged debts) have been removed.
  3. Use a Secured Credit Card. With a secured credit card, you deposit with the lender an amount equal or nearly equal to the maximum credit line on the card. Unlike with a debit card, your payment history for a secured card is reported to the credit reporting agencies.
  4. Budget. Create a realistic budget for yourself. Review your finances several times per week to ensure you are sticking to your budget.
  5. Set up Auto-pay. Set up automatic payments for your cable, Internet and phone bills, so you do not miss your payment due date. Again, watch your finances closely so that you know when money will be coming out of your account.

There are proven ways to rebuild your credit score after bankruptcy, and our clients are proof!

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets; I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s. – C.S.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Source:

https://www.thebalance.com/how-to-improve-your-credit-score-after-bankruptcy-316108

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Tips for Buying a Home Post Bankruptcy

Many people assume that filing for bankruptcy means that they will never be able to qualify for a home loan or take out credit again.  This is one of the many bankruptcy myths out there. The following steps can help you achieve the goal of purchasing a home post-bankruptcy.

  1. Review Your Financial Situation

After receiving your fresh start from bankruptcy, you should review your financial situation. Ensure that all of the debts that would have qualified for discharge in a bankruptcy case have, in fact, been discharged. It also helps to get a clear picture of where you are financially by reviewing your credit report.  Most financial experts recommend you review your credit report every year to ensure that no mistakes exist on the report and to ensure that progress is being made in rebuilding your credit.

  1. Establish a Budget

Not only is it helpful to get a good idea of your financial situation by reviewing your credit report and keeping tabs on your progress in rebuilding your credit, it is also important to establish and stick to a budget. Review your monthly household expenses, as well as your monthly income. Lay out any upcoming annual expenses, including taxes or vehicle registration, and make sure enough money is available to pay for all of these necessary expenses. If any additional funds are available after all needed expenses are met, use this money to help build up a savings for a down payment, as well as unexpected emergency expenses. Stick to this budget throughout the year, as much as possible to help build up savings for a down payment on a home.

One practical way to grow your savings is to follow the adage of paying yourself first. When creating a budget, make sure that putting money into savings is a priority by doing it before you use any extra money on unnecessary expenses. While the more you are able to put away into savings is better, also be realistic in how much you set aside for savings. Do not stretch yourself too thin to the point where you have nothing left for any other costs and expenditures.

  1. Rebuild Your Credit

Building up savings is important, but it is equally important to rebuild your credit after bankruptcy. One important tool used by bankruptcy filers to rebuild credit is a secured credit card. These types of cards carry lower spending limits and higher interest rates but using a secured credit card for a short period of time can help rebuild credit. After a set period of time, you can begin using a conventional credit card, so long as the balance is kept low and paid in full every month. It also helps to continue paying all bills on time and not missing payments, which will improve your credit score over time.

  1. Formulate a Plan

You should go into the home purchasing process with a plan in mind. Calculate what type of down payment you can afford, but also keep in mind what type of monthly mortgage payment your budget can handle. Financial experts recommend that you not spend more than 28 percent of your income on housing costs.  Also ensure that your budget allows for additional expenses, such as regular maintenance and costs that come along with home ownership. If you have a house you are interested in, make sure you schedule a thorough inspection to ensure that no additional, unidentified problems come along with the purchase.

  1. Get Organized

Before applying for a mortgage, it is recommended that you get yourself organized and prepared with all of the financial information that will be required for a mortgage application. If you have just completed a bankruptcy case, odds are you are familiar with compiling important financial documentation, including paystubs, tax returns, list of assets and other financial documentation.  Common documentation that is required includes bank, credit card and other loan statements, tax records, insurance documents, employment records, paystubs, and investment records. If you have recently gone through a bankruptcy, you may also need to provide legal documentation, such as your bankruptcy petition.

  1. Research Your Mortgage Options

It pays to do the research to determine the best available lending options. Conventional mortgages are available through private lenders, mortgage companies, commercial banks and credit unions. These types of mortgages tend to be more rigid in their criteria. The Federal Housing Administration (FHA) also offers loans that are backed by the government. These loans are a little more flexible in their criteria but come with other restrictions on the person’s ability to flip the property or rent it out later. FHA loans, however, are beneficial for first-time or lower-income homeowners.  Be sure to research the different interest rate options available before signing on the dotted line. Financing can be done through a fixed-rate mortgage, which locks the purchaser into an interest rate at the time he or she signs loan documents, or an adjustable rate mortgage, which can mean rates can fluctuate with the market.

How smoothly purchasing a home after bankruptcy goes can depend heavily on the type of consumer bankruptcy that was filed, whether it be Chapter 7 or Chapter 13 bankruptcy, and the type of loan being sought. Mortgage lenders have different “seasoning periods” that determine when someone is ready to receive a mortgage following a bankruptcy or foreclosure. For a Chapter 7 bankruptcy, the period usually is four-years after discharge for a conventional mortgage or two years for a VA or FHA loan. However, for a Chapter 13 bankruptcy, a borrower may be able to get a conventional mortgage just two years after receiving a discharge or even less than two years if the borrower is seeking a VA or FHA mortgage.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://blog.credit.com/2017/11/5-steps-to-buying-a-home-after-bankruptcy-115998/

https://blog.credit.com/2014/10/how-soon-can-i-buy-a-house-after-bankruptcy-or-foreclosure-98939/

 

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What Bankruptcy Does to Your Credit Score

A common concern people have when filing for bankruptcy is the effect it will leave on their credit score and their ability to access credit, again. While bankruptcy does affect your credit score, it is sometimes the last resort to rebuild your credit and your financial future. In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “clean slate.”

It helps to sort through the myths and facts before making that final decision, and if you do choose to file for bankruptcy, this does not mean all hope is loss. There are proven ways to rebuild your credit score after bankruptcy, and our clients are proof!

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s. – C.S.

The effects of bankruptcy on a person’s credit score depends on the score the filer had before filing for bankruptcy. If you have a higher credit score, the effect the bankruptcy will have will be more noticeable. However, if you have a lower credit score to begin with, the change may not be as much after filing for bankruptcy.

According to data from FICO, for individuals who had credit scores of 780 or more, the average amount of decrease is around 240, with a resulting credit score of 540. If the filer had a fair credit score of around 680, the decrease is on average 150 points, resulting in a score of 530. Both scores end up at roughly the same point, but the drop that the filer sees in getting to that score is noticeably different.

The good news is the American credit scoring system allows consumers to rebuild their credit score quite quickly after filing for bankruptcy. Even with a credit score at 550, you can still get back to a respectable score within one to two years through demonstrating good financial habits.

These habits include monitoring your credit report on a regular basis, ensuring that any accounts that are at a zero balance. Many financial experts recommend using a secured credit card to use for purchases to rebuild credit. After some time has passed and you have successfully used the secured card for a period, you may be able to slowly take on new credit, although it is never recommended that you have more than one account opened within a six-month period.

Rebuilding your credit is important for many reasons, the main one being it will allow you to be able to borrow in the future. Many filers worry that they will never be in the financial situation to purchase a home or qualify for another loan- these are all bankruptcy myths. Stick to a budget and a sound financial plan following bankruptcy, and you will be back on your feet before you know it.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Myths about bankruptcy and your credit score debunked

There are many misconceptions surrounding the amount of time it takes to rebuild your credit after bankruptcy.  We are clearing up some of the common misconceptions about how bankruptcy affects your credit score.

Myth #1: All bankruptcy information stays on your credit report for ten years.

The Truth: Only the public record of a Chapter 7 bankruptcy lasts for ten years.   All other bankruptcy references remain on your credit report for seven years, including:  Line items stating “account included in bankruptcy;” Third-party collection debts, judgments and tax liens discharged in bankruptcy and Chapter 13 public record items.  Once these items begin to disappear, you will see a bigger boost to your credit score.

Myth #2: You will have poor credit as long as the bankruptcy information stays on your credit report.

The Truth: This is one of the biggest misconceptions and one that our clients can tell you is a complete myth.

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s.  I’ve sent a screenshot in the event that you would like to use this to show prospective clients. – C.S.

You can begin to build your credit back with smart credit management.  Within a few years, you can obtain a “good” credit score ranging from 700 – 749 by doing the following:

  • Adding new credit, such as secured credit cards or small installment loans, to offset the negative information on your credit report;
  • Making on-time payments for all debt, new and old;
  • Keeping your credit card balances under 30% utilization.

Myth #3: Bankruptcy affects the credit of all filers equally, regardless of the amount of debt.

The Truth: Your credit score will factor in details such as the amount of debt discharged and the proportion of negative to positive accounts on your credit report. If you have a low amount of debt and only a few accounts included in your bankruptcy, your credit score will be higher than someone with a more severe bankruptcy case.

Myth #4: You cannot get a credit card or loan after filing for bankruptcy.

The Truth: Credit cards are one of the best ways to begin rebuilding your credit and you will be surprised how quickly offers for them will appear in your mailbox after filing for bankruptcy.  Secured credit cards, which require an upfront security deposit, allow you to spend and build credit easily and safely.

Myth #5: Bankruptcy will ruin your credit forever.

The Truth: Bankruptcy will damage your credit in the short term, but practicing good financial habits, can rebuild your credit to be stronger than ever. A report from the Federal Reserve Bank of Philadelphia showed that those who filed for Chapter 7 bankruptcy in 2010 had an average credit score of 538.2 on Equifax’s scale of 280 to 850. But the average score jumped to 620 by the time those bankruptcies were finalized, approximately six to eight months later. There are many ways to rebuild your credit after filing for bankruptcy. There are certain limitations you will face after filing, but taking advantage of the right financial tools can go a long way in helping you get back on the right path for your financial future.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Rebuilding Your Credit After Bankruptcy

Chapter 7 bankruptcy allows you to get a fresh start financially and erase past debts, but a legitimate concern consumers have is the effects it will have on their credit score and their ability to take out credit again.

One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future.  To the contrary, after filing for bankruptcy you can begin restoring your credit right away.

Here are some steps you can take to begin rebuilding your credit after filing for bankruptcy:

Create a budget.  This will help you stay on top of your finances and is something you should have gone over in the “pre-discharge” credit counseling.

Build an emergency fund.  Research shows that having as little as $250 saved up for an unexpected expense can protect families from having to resort to pay day loans and credit cards.

Plan your post-bankruptcy credit strategy.  Assess your situation by first checking your credit score.  Dispute any inaccurate information on your credit report and have this corrected immediately.  Remember, a Chapter 7 filing will wipe out your debts, but it does not wipe your credit reports clean.  Make sure and double check all three reports.

Here are some ways to access to new credit while rebuilding your score.

Secured loans are typically offered by credit unions or community banks.  One type of secured loan involves borrowing against money you already have on deposit.   The other type can be made without upfront cash.  Instead, this money is loaned to you and is placed in a savings account and released to you only after you have made the necessary payments.  In return, the financial institution agrees to send a report to the credit bureaus.

A secured credit card is backed by the deposit you make and the credit limit is typically the amount you have on deposit.  This can help repair your credit while you wait to become eligible for an unsecured card.

A co-signed credit card can improve your score, but it is definitely a big ask. Essentially, this individual (the co-signer) is risking his or her own credit history for you and will be on the hook if the full amount is not paid on the card.

If asking to co-sign is too much, an authorized user status will work.  Basically, you are an authorized user on that person’s credit card.  Just make sure the credit card will report the payment activity by authorized users to the credit bureaus, otherwise it will have no effect on your score.

A lighter debt burden automatically makes you more desirable to lenders, so be vigilant about paying on time.  Keep your credit card balances relatively low compared to the card’s limit.  For example, less than 30% is typically advised while using just 10% of the available credit is even better.

Still not convinced?  A testimonial from one of our clients in regards to their credit score after filing for bankruptcy.

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:

https://www.nerdwallet.com/blog/finance/rebuild-credit-after-bankruptcy/