Rebuilding Credit After Bankruptcy
Author: Jay Bhatt
Most people shy away from filing a chapter 7 bankruptcy because they fear the negative impact on their credit. A bankruptcy filing will remain on your credit report for 10 years. This, however, should not prevent you from obtaining credit and rebuilding your financial health. Most debtors that have unsecured debt will have a postive effect on their credit score post-bankruptcy. The postive impact results from having a “clean slate” and from the fact that creditors are aware of the 8 year ban on you refiling a bankruptcy. This will make you more creditworthy.
Use Credit to Rebuild Credit
The most common error that debtors makes after filing for bankruptcy is staying away from credit. We meet a lot of clients that tell us “credit got us into this mess, and we are going to stay away from it for a long time”. The key to rebuilding credit is to obtain and use credit. You must show creditors that you are creditworthy and capable of repaying your debts. You may initially pay higher rates, but this will help you in the long run.
Clean Up Your Credit Report
Post-bankruptcy, you must clean up your credit report. Obtain a copy of your credit report after receiving your chapter 7 bankruptcy discharge and make sure that all debts included in the chapter 7 bankruptcy are properly listed. If the accounts show open and overdue, contact the credit bureaus and insist that they change it immediately.
Installment Loans
These type of loans will help you rebuild your credit quickly. These include car loans, student loans and mortgages. You may want to obtain a car loan from a sub-prime lender and make sure that all the payments are made on time. Make sure the lender reports the timely payments to the credit bureaus. Generally, student loans cannot be discharged in a chapter 7 bankruptcy. Continue to make your payments on time and try to pay an amount larger than what you owe. Similarly, paying your mortgage on time will help you rebuild your credit.
Revolving
This type of credit mainly includes credit cards. You will be offered credit cards after your bankruptcy is complete. We suggest that you open one or two and make sure that all payments are made on time. Do not use the entire amount of the available credit. Light usage of the credit cards will help build your credit score. There are also secured credit cards which will provide you credit up to the amount that you deposit at the issuing bank. These credit cards will help build your credit.
It is important to note that any negative effect on your credit due to a bankruptcy filing will not last forever. You must take the necessary steps to ensure that you rebuild your credit.
Article Source: http://www.articlesbase.com/bankruptcy-articles/rebuilding-credit-after-bankruptcy-1225531.html
About the Author
My name is Jay Bhatt. I am a consumer bankruptcy lawyer in New Jersey. A majority of my practice focuses on helping people file for chapter 7 bankruptcy. I provide free information on my website to help decide if bankruptcy is the right option for you.
Listing Creditor’s Addresses for Bankruptcy?
I’m filing a chapter 7 and would like to know which addresses I can list for my creditors, if there is one address I must put or if any of these would work.
Say for a credit card, can I list the address I would mail my payment to or would the corporate address also work for the same company?
What if a creditor has turned my account over to a collection agency? Do I have to list the collection agencies address instead of the original creditor or can I still list the original creditor.
If your still reading is there an easy way to find out who I all owe money to..? besides checking my credit report and looking through my messy records?
Thanks for all your help!
What information do I need from my creditors to file bankruptcy?
I know that I need the names and addresses of my creditors. Do I need to know the exact amount that they claim I owe? Do I need to know the account numbers? Do I need to know the names and addresses of all of the collection agencies involved? If I can not obtian the names of the collection agencies, but the original creditor is included in the bankruptcy, does that wipe out the debt completely or do the collection agencies still have a right to persue? I can provide the names, addresses, and account numbers, but I do not know the exact amounts that I owe. I also do not have any information on the collection agencies. If I need this information, what is the best way to go about getting it? I considered writing letters, but I was advised not to alert my creditors of my intention to file as they might increase their efforts to collect. Please help
I’m being sued by a creditor, I’m already in a DMP and don’t want to file Bankruptcy.?
I’m being sued by a company that purchased a debt I owed to a loan company. The loan company had refused to work with the credit counselors, I mean we made an offer, the loan company came back asking for more and we accepted but they then decided to persue collections anyway. I’ve got all my debt aside from the DMP addressed (federal tax debt) except for this issue. The DMP is working but this civil suit put’s all of it in jeoperdy. I spoke to an attorney who thinks I can handle this but I don’t agree. He think’s I can file the answer, buy some time to build up cash, and make them an offer once a meeting is set up. Other attorney’s want to push me to file Bankruptcy. I don’t want to do this, I’ve been trying to get a small business going. Any advice? The debt is $1,100, they want an additional $467 plus interest and legal fees. If they get that judgement I’ll have to file Bankruptcy. I’m in Ohio and the case is in Franklin county.
I think I left something out, the DMP (debt management program) is a combination of debt I’m paying off around $10,000 not including the $1,100.00 I’m being asked for. Also, I would have an additional $1,600 in November so I’m looking to see if this is something I can get pushed out until around then and arrange a settlement. This to me is just a situation where I’ve been working on getting things taken care of and I would have been able to in about 2 more months but before I could get there they decided to go ahead and sue.
i am being threatened with bankruptcy by one creditor for the sum of £7998?
i have no fixed abode but a care of address can i still be made bankrupt
Filing bankruptcy and don’t know the address of one of my creditors?
I am filing bankruptcy and don’t have the address of one of my creditors (Bank of New York). They are no longer in business, but are part of BNY Mellon now. When I call them, they do not have an address since they are no longer in the loan business. What can I do?
I should mention that the problem is they do not show up on any of my credit reports! I have run all three!
You need to list everything and everyone. Go from your credit report and records you have. List the collections also along with the original creditor. Don’t miss anything or you will still owe that bill.
You can get most of the information you need from your credit report. Account numbers, addresses, and amounts owed can be found on your credit report. It is basically irrevelvant if you have the amount owed exactly correct. If you are filing Chapter 7, it basically doesn’t matter (there is no distribution of assets in most individual consumer filings). If you are filing Chapter 13, the creditors will be submiting Proof of Claims that state exactly what is owed.
You are entitled to one free credit report from each agency per year. annualcreditreport.com
Sometimes collection agencies do report, but not all do, so it is great if you have some bills from those collectors. However, as long as the original creditor is listed, collection agencies will NOT have the right to pursue that same debt.
It is also important to remember that if you have medical bills; local, small companies; or individuals you are indebted to, they will not usually be found on your credit report. You’ll have to rely on your bills for those.
You may want to head to your county clerks office and check to see if you have any judgments pending against you.
All of these steps should ensure that you will compile a complete and correct listing of creditors.
Good Luck.
This is just a threat!
I owe over £20K with various different creditors.
You cannot pay what you do not have.
Please contact a free charity debt help like the CCCS (Consumer credit counselling service) who will help you put together a repayment plan for free without taking a percentage for themselves like other so called “Debt” helpers.
Or you can contact you local CAB for advice which is also free. Although the CCCS is much quicker.
DO NOT let these people bully or harrass you for money that you obviously can’t pay back.
They cannot force you into Bankcrupty for that amount without you signing papers and taking it to court.
Do not feel you are alone and make sure you get the help you need.
if you act now, you should be able to start to sort things out.
I myself and my hubby pay 11 creditors each month for sums between £19 and £1. A total of £48 per month. That is all we have left after Essential bills,rent,travel,food,essential clothes etc.
The cccs will help you put together a budget which will show you outgoings and how much you have coming in and what a “reasonable” amount you could pay back per creditor.
There are some who will still try to take you to court and get a county court judgement against you, but providing you have proof of income/outgoings and send the paper work the judge will NOT award a higher amount that you can’t afford.
One of mine did just this and the judge “forced” them to accept my £3 a month. It’s not that I wasn’t willing to pay just not able to. Which is the crunch!
Try to offer a “token” payment if you can (but something you can afford) every month until you both come to an agreed repayment plan.
Not all debts can be or will be written off. The repayments you offer will not always be £1 only. This depends on what you owe, to whom you owe, if they accept that, your income and situation etc etc etc. There is also the IVA scheme but costs money to set up and is a lot stricter than a repayment plan but is softer than going Bankrupt.
There also different ways for repayments to be made.
There are Debt managment plans (DMP) which set the ammounts per creditor and is longer term. There is also a pro rata repayment plan where if you have fluctuating income the creditors are paid back on a pro rata payment. (EG one creditor you owe £7k will get a higher repayment than one you owe £200 to) This is also not a long term fixed plan but one where both sides agree to repyament and the account “looked” at after say 6 months.
Look at all you options before making a decision because as you can see there are lots of things to think about. Get the facts and info from a reputable charity and the go from there.
Good luck and any other into you might need, please feel free to contact me via email. :0)
The above poster is wrong. ALL creditors do NOT necessarily show up on credit reports. Surely you must have some paperwork on the original loan. How old is it and when did you default? It might be beyond the legal statute of limitations for collection.