It’s a common misconception that filing for bankruptcy ruins your credit for the rest of your life, rendering you unable to ever obtain a loan or rent an apartment again. While your credit is negatively impacted by a bankruptcy filing, you do have the ability to start fresh and rebuild your credit after bankruptcy. Here’s what you need to know.
Put Together a Realistic Budget
It may sound cliche to suggest making a budget, but this basic tool is absolutely essential to your financial health. You should always know what you’re spending versus what you’re earning so you can act quickly to curb needless spending that cuts into other areas of your budget. Your budget should be realistic enough that you can reasonably stick to it each month.
Don’t Make Late Payments
Following the completion of your bankruptcy filing, you should make a concentrated effort to make all of your payments on time going forward. This is especially important if you’re making payments to a trustee under a Chapter 13 plan, or if you have creditors who will report late payments to the national credit bureaus.
Get a New Credit Card
Taking out a brand new credit card right after you’ve successfully completed a bankruptcy filing may seem like the worst advice in the world. However, it’s important to understand that to rebuild your credit after your bankruptcy, you’ll likely need some kind of credit card or line of credit that will report your on-time payments to one or more of the three national credit bureaus. In most cases, no credit is just as harmful as having a low credit score.
Keep the balance on your credit card around 30% of the total amount of available credit you have. Credit bureaus will give out higher scores to consumers who consistently use part of their credit, but not all.
Need Help with Crushing Debt? Call Today
If it seems like debt is taking over your life, you’re not alone. It can feel like you’re drowning in bills you can’t pay and like there just aren’t any options available. At Carvajal Family Law & Bankruptcy, we can help. Our experienced attorneys will meet with you to better understand the scope of your financial situation and to help you explore different solutions. If bankruptcy will result in the best outcome for you, we’ll assist you with the filing process. Call today for your free consultation at (866) 918-1128.