If you’re feeling overwhelmed by debt, bankruptcy may be the answer to your financial woes. But what about after bankruptcy? People often feel like their credit will be ruined beyond repair. However, in reality, bankruptcy can give you a fresh start, and it is possible to rebuild credit after bankruptcy.
At Lorraine M. Greenberg & Associates, we can help. Call our experienced Chicago bankruptcy attorney for a consultation of your situation, and to learn more about bankruptcy and how you can recover your financial situation.
Review Your Credit Report Frequently
Whether you file Chapter 7, Chapter 13, or another type of bankruptcy, it is possible to rebuild credit after bankruptcy.
You should start by making sure everything on your report is accurate. Once your bankruptcy case closes, your credit report may reflect that some of your debts were discharged or included in a payment plan. It’s important that they all reflect that you have addressed your debts and are not simply avoiding them.
Dispute Incorrect Information on Your Credit Report
If your credit report does not accurately reflect your bankruptcy and how you managed your debts, contact your bankruptcy attorney to figure out what you should do next. You may need to challenge any information on your credit report that is incorrect. This may require you to contact the original creditors, third party debt managers, or credit bureaus to dispute debt information.
Use Secured Credit Cards
Secured credit cards and accounts can be used to rebuild credit after bankruptcy. These accounts will allow you to deposit a small amount of money and then use that money to make purchases. The credit cards will report on your credit report that you are making regular payments and properly managing your accounts. It’s important to show creditors that you are being responsible with credit after bankruptcy.
Pay Your Bills on Time
Make sure you pay bills and medical expenses on time in order to rebuild credit after bankruptcy. If you fail to make regular payments, your debt may be sent to a management company that will report negatively on your credit report. Your goal after bankruptcy is to rebuild your credit, so you should pay everything on time. If you are unable to make a payment, contact the company and make arrangements that will prevent them from making a negative credit report.
Reaffirm the Debt That Will Benefit Your Credit Report
You can rebuild credit after bankruptcy by maintaining diverse accounts and paying them on time after your discharge. Even though you may be able to discharge your car loan, it may be more beneficial to keep it and make regular payments. Many creditors, such as car lenders and mortgage companies, will renegotiate your loan after a bankruptcy. Work with a bankruptcy lawyer to manage your debts after bankruptcy and work towards the goal of rebuilding your credit.
Stick to a Strict Budget
A monthly budget can ensure that you do not use more money than you earn. It can be difficult to know if you have enough money to cover your necessary expenses and how much disposable income you have. The credit counseling courses that you take during bankruptcy can help you understand these important terms and the need for a budget. You may also work with an experienced professional who can review your income and expenses and help you develop a reasonable budget. By sticking to a budget, you can rebuild credit after bankruptcy.
Avoid Unnecessary Debt
Although some of your debts may be beneficial, such as your car loan, it is not a good idea to get into more unsecured debt after bankruptcy. You should avoid traditional credit cards, personal loans, and other debt that can be difficult to pay off in the future. To rebuild credit after bankruptcy, you should understand the different types of debt and avoid that which can cause you further financial problems.
Learn More About How to Rebuild Credit After Bankruptcy
Getting back to normal life is possible if you know the steps to take to rebuild credit after bankruptcy. For more information about how to do this, call Lorraine M. Greenberg & Associates today. We can advise you of your options and help you through the process.