Saturday, May 5, 2012

How to Start Over After Bankruptcy

The truth is that once the last of the paperwork has been filed most people are just sick and tired of talking about their finances. It's understandable that now you want to be done and stop thinking about all of this, but there will come a time when you'll be wanting a car, to rent a new apartment, or to buy a house and you'll be needing to have a decent credit score. Yes, in seven years this will all age off, but seven years is a long time--and if you haven't done anything in those seven years it's not as though you'll have a good score then, either.

If you start building a plan immediately you can really start over after bankruptcy. Within two years or so, with persistent effort, you can have an acceptable rating to buy a house or do anything else that interests you. That is a best case scenario, however, and it will probably take you a bit longer than thatit can definitely be done in shorter than the time it will take this whole experience to fall off your credit report, though.

Once you've taken the time to build a good plan it won't take too much effort to follow it, so build a plan for your financial future immediately after everything has been finalized. Having a thorough plan is the key to making everything happen. It is essential and probably the most important thing you'll do for your finances.

Your first task should come up about a month after things should be finished when you go to check your credit report. It's very common for some of your old creditors to leave your old debts marked as overdue or late instead of included in bankruptcy. You need to call them and make sure they change this. It's counteractive to have these debts carried around on your report to really start over. This is essential to any other plans you have. You may have to call multiple times and send them something in writing, but keep on top of it and don't let them intimidate you.

After this is taken care of you'll want to start looking at ways to improve your score. Your credit score is calculated based on the information from your history, which is made up of two kinds of payments: revolving (credit cards) and installment (loans). It's easiest to start off building this history with a secured credit card. You can get these pretty much anywhere, including your current bank. They work by using some money in a savings account as collateral on the card, which also sets your credit limit. You deposit this money, usually a few hundred dollars, into a savings account during your application. Use less than 30% of your limit on the card each month, and pay it off in full. This will build up a history of responsible payments, improving your score.

Once you've taken care of this you'll want to look into your many loan options to further improve your score.

Building up a new history and improving your score is a great way to ensure you'll have a lot of options for your future so you can truly start over after bankruptcy.

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