Your Life After Bankruptcy
How to Rebuild Your Credit After Bankruptcy
This is one of the most common topics I talk about in an initial consultation with my clients. And rightfully so. People will want to know how they can begin to rebuild their credit so they can qualify for a home mortgage or finance a car after receiving a discharge. In my experience, your credit will take a hit between 150 and 200 points, though I cannot guarantee these numbers. The higher your credit score before you file, the bigger the fall after you file.
Here’s the thing. If you are beginning to make late payments or have a judgment entered against you, your credit is already down the proverbial hole. By filing bankruptcy, you will give yourself the opportunity to breath again and begin to rebuild your credit for a brighter financial future. As your Atlanta bankruptcy attorney, I will walk you through the appropriate steps to take to rebuild your credit after bankruptcy. I have had clients who filed Chapter 7 bankruptcy and built their credit score up to the 700’s within two years of receiving a discharge. Remember, just because a bankruptcy is on your credit report for 7-10 years doesn’t mean your credit score cannot go up during that time. Here are just a few tips to boost your credit score after filing:
1. Take a credit card offer and charge only a few small budgeted items.
Immediately after filing bankruptcy, you will begin to receive credit card offers in the mail. Why would a credit card company want to give a person who just filed bankruptcy a credit card? Because if you receive a discharge, you cannot receive another discharge for at least 4 years, depending on the chapter you filed and the chapter you want to file in the future. When you receive the card, only charge a few small items to the card each month. Once you are satisfied that you can pay off one card in full every month, apply for a second card.
2. Fix Your Credit Report.
As part of your bankruptcy filing, I will also tell you how to check your credit report a few months after filing bankruptcy to make sure that no old debts are still listed as active.
3. Pay Your Bills On Time!
This is the most important step in rebuilding your credit. Pay each and every bill on time. If you have to use automatic deductions from your checking account, do so. But make sure to keep an eye on your finances at all times to make sure you don’t overdraft. I also recommend using a free online tool such as Mint.Com to keep track of your finances. Another tactic is to ask your landlord to report your timely payments to the credit bureaus, though most landlords don’t want to take the time to do this.
Bankruptcy and Your Housing
After filing bankruptcy, will will often find that individual landlords will be fairly eager to work with you since they realize that once you’ve filed bankruptcy, you can’t file again for a certain period of time. Many landlords are also aware that you are on a track to rebuilding your finances and that securing a roof over your head is priority number one.
If you are a homeowner, as long as you keep making your monthly mortgage payments, you can stay in your home. If you are not yet a homeowner, you will have to wait at least two years from the entry of your discharge to qualify for a FHA loan.