Rebuilding your life after bankruptcy

Once you received the discharge order from the court you will ready to begin your new life after bankruptcy and enjoy your fresh start. With a few exceptions your old debt will no longer exist and any money or assets you acquire after the discharge are yours to keep.

Rebuilding your credit

A rule of thumb is that it takes about two to three years to rebuild your credit after a bankruptcy. A recently updated industry standard of mortgage banks is to give a loan for a home after two years without considering the bankruptcy. Most creditors require a steady employment history after bankruptcy and that you paid your bills on time. For detailed information how to rebuild a credit read Credit Repair by Robin Leonard or contact our office.

Make a budget

Making a budget is the key to financial health. It will help you control any impulses to overspend. It will assist you in saving money to become independent of credit. This will help rebuild your credit. The credit counseling class you had to take before you filed for bankruptcy will help starting a budget. Find out how much you spend. Note every dollar you spend throughout the week such as $3.00 dollars for the coffee, $2.00 for the newspaper etc. Review your spending after one month. Look at your list and identify what items you bought you do not need or if you could buy items for cheaper or use what you have more efficiently. Once you understand your spending pattern you will be ready to make a budget. Write down your net income after taxes in one column and into the next column write down your monthly expenses. Total the amount. If your are in the red you will have to make some changes to the expenses. Once you are at a cero or rather in the black you have a budget. Stick to your budget. Once you have a budget you can start producing positive entries in your credit report. I makes sense to get a credit card or to work with a local store to buy something on credit. If you pay on time you will create positive entries for your credit file. Another possibility is to request a secured credit card from a bank.

Watch out for credit card look-alikes

Some companies offer cars that are not credit cards but look like they were credit cards. Mostly they permit you to use the card only to buy items from their catalogue. The items in these catalogues are usually overpriced and not always of good quality. Your payments are not reported to the credit agencies with the effect that you are not building any credit.

Fix your credit file

To rebuild your credit you need to make sure that the information in your credit file is correct. Request a credit report from:

  1. TransUnion, Consumer Disclosure Center, P. O. Box 2000, Chester , PA 19022,
  2. Equifax, P. O. Box 740241, Atlanta, GA 30374
  3. Experian, P. O. Box 2104, Allen, TX 75013

Your credit file will give you the complete credit report but also show the sources of information it has. It will show you what institutions have received your file within the last year. Negative information can be kept in the credit report for up to seven years. You should challenge incorrect and outdated entries on our report. Since the bureau must investigate your challenges within thirty days it often does not have the resources to do so and must as a matter of law remove the negative entry.

Discharged debts on your credit report

If discharged debt still appears on your credit report it is false reporting and some courts treat it as a violation of the fair debt collection act. Find a bankruptcy lawyer if a clearly discharged debt appears on your credit report to assess whether it makes sense to challenge the creditor and the credit agency. I the credit agency does not remove the information after you challenged it within thirty days you have the right to write a letter with up to 100 words to the credit agency to put in your file were you dispute the information. The letter must be specific to the negative information. If the letter is too general it will stay in your credit file for seven years. Make sure that any other public information contained in your credit report is accurate. If for example a lawsuit against has been dismissed due to the bankruptcy make sure this is reflected in the credit report. You may need a bankruptcy lawyer to help you with this complex area.

How to fix your credit

If you have past due entries on your credit report you can remove this under certain circumstances if you negotiate with the creditor. One way is to request the creditor to remove the past due entries in exchange for full payment of the amount you still owe. You can ask the creditor to “re-age” the account which in essence makes the current month the month you start repaying and it will show no late payments on your report.

What to know about credit repair companies

Advertisement of credit repair agencies are all over the media. Many of these companies are not legitimate and the ones that are legitimate mostly use standardized techniques that do not resolve your problems. Every person’s credit is unique and requires an individual approach. Make sure you inform yourself and seek advise from a bankruptcy attorney before you take a step into the wrong direction.