At Winterbotham Parham Teeple, a PC, we want to help you throughout the whole process of filing for bankruptcy in California, which is why today we want to give you some tips on how you can improve your much-needed credit after filing for bankruptcy.
To speak to a qualified bankruptcy attorney from Winterbotham Parham Teeple, a PC, call 800.400.9000 immediately.
Declaring bankruptcy may be a very useful financial planning tool for people who are currently drowning in debt. Bankruptcy provides you with the necessary financial breathing room by allowing you to discharge (Chapter 7) or restructure (Chapter 13) your debts. Unfortunately, filing for bankruptcy will lower your credit score. The good news is that if you make an effort to adhere to best practices for credit management, you could have a credit score in the 700s within four to five years of filing for bankruptcy. These suggestions will assist you in improving your credit score after bankruptcy.
Examine your credit reports
Check your credit reports a few months after filing for bankruptcy to ensure that all debts are reporting correctly. For example, if you filed for Chapter 7 bankruptcy and had all of your credit card bills discharged, each of your creditors should have a zero balance or a closed account notice next to it. If you don’t, contact the creditor and the credit reporting company as soon as possible to correct the reporting errors and give yourself a fresh start.
Reaffirm your secured debts
Entering into a reaffirmation agreement with secured creditors, such as a car loan, removes the debt from your bankruptcy and reinstates the loan between you and the lender. By reaffirming on a secured debt, you need to keep will ensure all the payments you make towards the loan continue to show up on your credit report. This will help your credit score improve immediately after your case concludes.
Pay your bills right away
Paying your bills on time and in full is a quick and easy way to raise your credit score because your payment history accounts for a significant portion of your credit score. Setting up monthly reminders or enrolling in autopay should assist you in staying on track.
Establish new credit
Even if you are tempted to live on cash after filing for bankruptcy, doing so will harm your credit. To begin improving your credit score, you must open a new line of credit and begin building your credit history with favorable information. You could start with a secured credit card (backed by a deposit with the creditor).
When applying for a new credit card, keep your amount well below the credit limit because not using all of the available credit can help your credit score. Consider applying for a car loan in a year or two. Although the interest rate on your initial loan will be high, if you make the monthly payments on time, your credit score will improve, and you will be able to qualify for loans with lower interest rates in the future.
Set aside money for emergencies.
Unexpected events, such as a medical emergency or a prolonged period of unemployment, frequently force people to incur excessive debt, depleting their resources and forcing them to file for bankruptcy. To break the debt cycle, try to start saving for emergencies again. Create and stick to a savings budget.
If you want to learn more about how bankruptcy can affect your credit score and how to recover from one, speak with a qualified bankruptcy attorney at Winterbotham Parham Teeple, a PC by calling 800.400.9000 today.