There are many misconceptions surrounding the amount of time it takes to rebuild credit and bounce back after bankruptcy. A recent study by LendingTree, reveals that individuals who file for bankruptcy can improve their credit score sooner than they think. In fact, more than 40 percent of consumers end up having a credit score of 640 one year after filing for bankruptcy. Approximately 65 percent of filers see the same score, at least, three years after the bankruptcy case is over.
We have some important tips to help you bounce back and stay on track after filing for bankruptcy.
Put Together a Bankruptcy File.
After the bankruptcy case is complete, chances are, the filer has a lot of paperwork. It can be very tempting to put it all away, never to look at it again, but it is important to keep all these documents handy in the event they are needed in the future. If a consumer wants to purchase a car or a home, he or she may need to produce the bankruptcy paperwork before receiving financing. It helps to stay organized and put together a file for your bankruptcy paperwork.
Look Back at the Past and Strategize for the Future.
Before moving forward, it helps if the consumer gets a clear understanding of how he or she got in the bad financial situation to begin with, whether it be due to a job loss, divorce, an illness, overspending, or just bad financial luck. It helps to take a moment and strategize how the consumer wants to move forward.
Develop a Good Relationship with a Bank.
Even if the possibility is in the distant future, if the consumer wants to qualify for a loan or make a big purchase, like a home, it is important he or she has a personal relationship with a good bank. Many times, it helps to tell them a bit about how the person ended up in bankruptcy and give them a human face to the numbers on the account.
Be Cautious in the Future.
Once a consumer is out of debt, he or she will likely receive communications from lenders offering financing for various purchases. They will see that the person no longer is in debt and will not be able to declare bankruptcy again for many years, making that person an easy target. The kind of lenders who reach out to consumers right after bankruptcy, however, are not always the most reputable lenders. Be very cautious when considering these offers.
Review Your Credit Report.
After filing for bankruptcy, it is important to periodically review your credit report. A credit report can be reviewed annually for free, and it shows not only the progress being made in rebuilding the consumer’s credit score but also any false or old charges that should no longer be on the report.
Think Before Borrowing.
It can be tempting to borrow again, believing that the consumer can handle a payment when, in fact, he or she cannot. Make sure that the payments are feasible by building a budget before applying for another loan. Also keep in mind that a credit score takes a hit after applying for a new loan, and this could quickly destroy any progress made on rebuilding the credit score.
Work on Rebuilding Your Credit.
One of the best ways to get credit back to where it once was is to pay all bills on time every month. Missing a payment is an easy way to hurt your credit score. Using a secured credit card after filing for bankruptcy is also an excellent way to improve your credit score, as the payment history is reported to the credit bureaus. Put together a budget, see what your monthly expenses are, and stick to that budget. Make sure you have enough income every month to meet your monthly obligations, and set up automatic payments, if needed, to make sure no bills are missed.
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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.