Filing for bankruptcy is an emotional decision. It can feel like the end for your credit rating. But in some circumstances, going through bankruptcy can begin the process of rebuilding your credit sooner. Compared to trying to keep creditors at bay, struggling with cash flow, and missing payments, bankruptcy is a quicker path to getting back on track financially. A bankruptcy lawyer can help guide you through the process.
If the court has developed a plan for you after bankruptcy that takes into account your income and basic expenses, you will be able to make payments on time. Rent, utilities, and any remaining debts should be in line with your cash flow.
Secured credit cards can help you rebuild your credit score after bankruptcy. These cards require you to put money in the card company’s account, so they are not taking as much of a risk. Repaying these cards monthly can help establish that you are capable of repaying your debts. Your payment history with credit cards is a key component of your credit score. Continuing to make late payments on past-due cards prior to bankruptcy will not help you.
You may assume that no one will loan you money after bankruptcy. This is not the case. Millions of americans face bankruptcy for a variety of reasons, and many of them can responsibly use credit after the bankruptcy is settled. Because you cannot file for bankruptcy soon after you have already filed, creditors will take a chance on you with small loans. Prompt repayment of these loans will help rebuild your credit score.
Saving money so that inevitable repairs and other problems do not require you to use debt in an unplanned and uncontrolled way is key to keeping balances from rising. Paying off any debts you do have as quickly as possible and keeping balances low will help rebuild your credit.
Regardless of the reasons you file, and regardless of your income and expenses after bankruptcy, it will be important to develop a budget and stay on it. This will help you keep debt low and help you reduce your balances both on debt that you kept in your bankruptcy agreement and on new debt.
By settling your past-due debts in bankruptcy, you may be able to get a quicker start on rebuilding your credit. You should discuss your options with a credit card defense lawyer in Tampa, FL.
Thanks to The Law Office of Michael A. Ziegler, P.L. for their insight into bankruptcy law and rebuilding your credit.