Life After Filing for Bankruptcy in Las Vegas
Life After Filing for Bankruptcy in Las Vegas
Filing for bankruptcy may alleviate a great deal of stress in your life. So much tension is removed from your shoulders once you understand you have your debt under control, are no longer receiving annoying phone calls from creditors, and are feeling great about your financial future!
The last thing you want to do is make bad judgments in the future that will land you in a similar scenario. That’s why bankruptcy attorneys at Freedom Law Firm prepared useful information on how to recover after filing for Chapter 7 or Chapter 13 bankruptcy—as well as how to avoid getting into the same scenario again.
Build a Financial Plan
Whether you call it a budget or a fancy moniker like “financial plan,” knowing how much your bills total, how much you want to save monthly, and what your long-term financial objectives are is VITAL to your overall financial health.
According to basic economics, the money coming in must be equal to or greater than the money going out in order to maintain the most basic level of financial peace; therefore, review your spending and consider whether you can make any cuts or if you need an additional source of income to maintain your desired lifestyle.
In addition, life has a habit of tossing curve balls our way, so it’s in your best interest to establish a savings account that you only use for emergencies. The spreadsheet above accounts for savings; follow this rule consistently.
Initial steps right after filing bankruptcy.
A bankruptcy discharge relieves an individual of the duty to repay certain consumer debts. Creditors will be unable to collect on discharged debts by contacting or suing the debtor, garnishing the debtor’s wages, or freezing the debtor’s bank account. However, creditors frequently collect on discharged debts because the creditors failed to update the debtor’s account in the creditor’s system or the debtor’s consumer credit file. A consumer credit file contains information on a person’s debt and repayment history.
9 steps to rebuilding your credit after bankruptcy
Your credit score begins to climb with each favorable notation on your report. You’ll be able to get new credit, loans, and mortgages with lower interest rates and conditions. Here are nine strategies to help you recover your credit after bankruptcy.
1. Keep up payments with non-bankruptcy accounts
Determine whose accounts were not closed when you filed for bankruptcy. Bankruptcy discharges most of your debt, although there may be some outstanding obligations, such as education loans or alimony payments.
Paying down these charges will help you rebuild your credit after bankruptcy. This reduces your debt-to-income ratio, which should improve your credit. When possible, pay more than the minimum monthly amount to expedite progress. Making on-time payments is critical to establishing excellent credit.
2. Avoid job hopping
Job hopping has no direct impact on your credit score, but it can have an impact on lenders. They want to know that you have a steady source of income and that you will be able to repay the loan.
A lender examines your income, employment history in the last 24 months, credit score, and other variables when considering your application for new credit or a loan. Having steady employment works to your advantage since it increases the lender’s trust in your capacity to repay your debt even if you file for bankruptcy.
3. Apply for new credit
After a chapter 13 or chapter 7 bankruptcy, it is frequently more difficult to obtain fresh credit. Interest rates and costs may be higher, and approval may be more difficult.
However, it is critical that you obtain fresh credit following bankruptcy to demonstrate that you are a trustworthy lender. Building a solid history of on-time payments provides your credit score with the positive history it needs to begin moving in the correct direction.
In our experience, the following are the best ways to acquire fresh credit after bankruptcy.
Apply for a secured credit card: Because they demand a cash security deposit (e.g., $1,000 deposit Equals $1,000 credit limit), secured credit cards are easier to obtain than unsecured credit cards. You can reestablish your creditworthiness by making on-time payments. The credit card company may eventually boost your credit limit or provide you with a standard, unsecured credit card.
Obtain a credit builder loan: With a credit builder loan, you must repay the lender before receiving the funds. These are often minor loans ranging from $500 to $5,000. After making payments up front, you receive your sum of money.
Retail and gas cards: These credit cards have more consumer-friendly requirements than other unsecured cards. Be informed of their requirements before applying since doing so might have a negative impact on your credit. If you are not approved, you will not get the desired effect. Belittle purchases, such as a couple of tanks of petrol, and make sure to pay off the amount.
Open a modest loan: Fixed-payment installment accounts, such as an auto loan or home equity loan, demonstrate to creditors that you can borrow responsibly. Interest rates may be higher after bankruptcy, but the expense of rebuilding your credit may be worth it.
4. Consider a cosigner or becoming an authorized user
Having a cosigner on a loan or rental agreement might improve your chances of acceptance following bankruptcy. A cosigner serves as a legal, financial backup in the event that you fail to make payments. Cosigners are frequently required for auto loans, mortgages, and even rental agreements. You get accepted for credit in your own name with the help of a cosigner. Successful payments boost your creditworthiness and your credit score.
You can also become an authorized user on the credit card of someone else. Check with a family member or friend to see if they will add you to their credit card account. Payments appear on your credit record if the credit card company reports them to the credit agencies.
5. Be smart about applying for new credit
Each new credit application causes a hard inquiry to be placed on your credit report. A high number of hard inquiries in a short period of time might harm your credit score since lenders view it as hazardous conduct.
If you are repeatedly refused new credit cards, it is possible that their restrictions are too stringent for your present credit profile. Keep an eye on your credit and be informed of the underwriting rules of the issuers so that you may apply for credit more sensibly.
First, try a protected credit card or become an authorized user. You can also enroll in a rent reporting service, which records your rent payments to credit bureaus. Better credit history will boost your chances of being approved for credit cards with tougher standards in the future.
6. Keep up payments with new credit cards
The most crucial aspect influencing your credit score is your payment history. Once you have new credit, it is critical to make regular payments, especially if you have recently filed for bankruptcy.
You can remain on top of your payments by doing the following:
- Enrolling in automatic payments
- Paying down your credit card many times every month
- Setting up payment reminders
- Organizing your own money so that you can pay off the entire sum each month
7. Have your payments be reported to the credit bureaus
Creditors and lenders are not required to record your activities to the credit agencies, so inquire whether they do. Any lender or creditor you use after bankruptcy should ideally report to all three so that your good activity is recorded and your credit score is raised.
You can also have non-credit payments (such as rent, electricity, and mobile phone bills) recorded to the credit agencies. Not all credit scoring models use these payments when computing your score, but having these good payments as part of your credit history won’t harm.
8. Keep your balances low
When your credit card balance is low, it suggests you’re utilizing a lesser fraction of your total available credit. Credit usage ratios of less than 30% are recommended by experts. A low credit usage percentage indicates to lenders that you are likely to repay what you borrow.
9. Check your credit report to ensure your bankruptcy is accurately recorded
Bankruptcy severely harms your credit report, but there may be inaccuracies that make it appear worse than it is. For example, debt that is listed as current or late rather than dismissed may have a negative impact on your credit report.
After filing for bankruptcy, make sure to examine your free credit reports. If you find an error, you should contest it as quickly as possible.
Many customers complain about unfair credit reporting and blatant errors. Be advised that your previous bankruptcy should no longer appear on your record after seven years (chapter 13 bankruptcy) or ten years (chapter 7 bankruptcy).
Your credit report after bankruptcy
Monitor your credit reports on a frequent basis in the years following your bankruptcy. Keep an eye out for inaccuracies and then submit a dispute. Get assistance from a credit repair agency that can identify inconsistencies, dispute them, and guide you to the greatest credit score possible.
Developing a savings plan.
It is critical to construct a savings strategy after receiving a fresh start through the filing of a bankruptcy. A savings strategy is one in which individuals use the money they have saved to deal with unanticipated crises, attain a short-term and/or long-term financial objective, and establish a secure financial future. A short-term financial goal is one that people want to achieve within a year or two. A $500 emergency fund is a good illustration of a short-term aim.
This may be accomplished by setting aside a set amount of money each month. A long-term financial objective, such as creating a retirement fund or saving for a down payment on a home, takes longer to complete, includes more money saved, and necessitates the discipline to save consistently. Building a strong financial future with a savings plan can assist individuals in continuing on their new start path after declaring bankruptcy. Set up a savings account that is distinct from the accounts used to pay household bills and make frequent purchases.
Freedom Law Firm is here to help.
Bankruptcy is often the last but necessary resort. It is a delicate and complex proceeding, and you want someone with plenty of experience to consult you and guide you through the process and help you determine the scope of the discharge.
In many cases, unless a party in interest files a complaint objecting to the discharge, the bankruptcy court may issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors.If you would like to find out whether bankruptcy is the right option for you, please request a call-back by submitting a short online form. All initial consultations are free and confidential.