Filing bankruptcy puts a 10 year black mark on your credit and devastates your credit score. Getting after bankruptcy credit that you don't have to pay through the nose to qualify for can be next to impossible if you don't implement these vital steps to begin rebuilding your credit immediately. There are 4 key factors involved in repairing your credit after bankruptcy; they are to keep an eye on your credit report, set up a household budget, and begin reconstructing your after bankruptcy credit by applying for 2 specific types of credit and learn how to use them responsibly.
One interesting thing is that a trustee is not just about bankruptcy. Often, as a trustee is conducting this review they will help you to determine that a bankruptcy is not going to be beneficial to your situation and perhaps there is a better way (i.e. consumer proposal). This typically occurs if you have higher income and/or substantial assets or some other unique aspect of your situation. This is part of the reason that a trustee is required to review things and explain not only about bankruptcy but all the options to bankruptcy as well. That way you are aware of what different choices are available and the ramifications of those different directions. This is a part of the process that most people find surprising; if you are not a good candidate for bankruptcy your trustee will tell you that. A trustee does more than simply file bankruptcy or suggest that people file for bankruptcy, a trustee is a licensed professional who's duty it is to help you understand all the options that exist and make recommendations based on what is best for everyone. So if you are a better candidate of a consolidation loan, a debt management plan or a consumer proposal, your trustee will make sure you not only understand this, but will assist you in finding the help that you need.
After checking your 3 credit reports, your next step to improving your after bankruptcy credit should be to make a household budget. Make a monthly calendar with all of your income listed by date and schedule all of your household bills such as utilities, insurance, house payments, etc to be paid on or before the due date each and every month. The most essential element of acquiring after bankruptcy credit is to prove that you can make your payments on time. Lenders will check your household utility companies for your payment history, so make sure those are never late. Acquiring after bankruptcy credit is really just a matter of proving to your creditors that you can responsibly handle your credit and can repay your debts on time. You have to regain their trust by showing them a good payment track record.
Lenders are looking for you to be able to handle two types of after bankruptcy credit, revolving and installment. Revolving credit such as a secured credit card is the easiest type of after bankruptcy credit to attain. You make a $200-$500 deposit with the bank issuing the card, and they approve your after bankruptcy credit line based upon that deposit. But what ever you do, don't make the huge mistake of maxing out your new secured credit card. Maxing out your credit cards damages your credit score. If you want to increase your after bankruptcy credit rating, its best not to charge more than 30% to 35% of your credit limit. And it is especially important to pay the balance off in full each month. Light, regular use of your new credit card will build a solid foundation and maximize your chances of receiving a better interest rate on your next after bankruptcy credit card. Don't just grab any secured credit card though, look for one with no application fees or annual charges; you don't have to pay excessive fees to build your after bankruptcy credit. Make sure the card you choose reports to all 3 major credit bureaus. You are not building a good after bankruptcy credit rating unless your payment history is being reported regularly. Finally, make sure it converts to an unsecured card after 12-18 months of on time payments.
For example, when you submit your specific bankruptcy case to them along with all the relevant information, they will suggest you the right type of bankruptcy that you should claim for and they will provide you the right bankruptcy forms to fill. Once you submit those forms, they will review all the information you provided with the forms. If some information is missing, the online bankruptcy forms processor will inform you regarding the same and will ask you to submit the missing information.
The third responsibility you will have is attendance at two credit counseling sessions courses. These courses can be conducted individually or in groups, depending on what you have arranged you're your trustee and they are required to cover topics the essential components of our personal finance (i.e. budgeting, spending habits, re-establishing credit, etc.). The goal of these sessions is one of rehabilitation, they are designed to help review and hone your financial management skills, as well as the identification and prevention of destructive habits. The fourth thing you are required to do is the sending of a monthly report to your trustee. These reports are simply a summary of your monthly income and expenses and in order to fill them out you are required to keep receipts for any money you spend during the month. At the end of the month you are required to summarize these receipts on a form that will be provided by your trustee and provide a copy of this form to your trustee. There are certain receipts that you will have to attach to this form, but the specifics of this will be reviewed by your trustee. These are the standard duties and responsibilities that each individual bankrupt must complete. There are a few other responsibilities that may be required (i.e. attendance at a creditor meeting, attendance at an examination by the Office of the Superintendent of Bankruptcy etc), but these are relatively rare and will be discussed in more detail when you meet with a trustee of the evaluation we previously discussed. In the vast majority of cases upon completing these four duties your part of the bankruptcy is complete and you become eligible for a discharge.
One interesting thing is that a trustee is not just about bankruptcy. Often, as a trustee is conducting this review they will help you to determine that a bankruptcy is not going to be beneficial to your situation and perhaps there is a better way (i.e. consumer proposal). This typically occurs if you have higher income and/or substantial assets or some other unique aspect of your situation. This is part of the reason that a trustee is required to review things and explain not only about bankruptcy but all the options to bankruptcy as well. That way you are aware of what different choices are available and the ramifications of those different directions. This is a part of the process that most people find surprising; if you are not a good candidate for bankruptcy your trustee will tell you that. A trustee does more than simply file bankruptcy or suggest that people file for bankruptcy, a trustee is a licensed professional who's duty it is to help you understand all the options that exist and make recommendations based on what is best for everyone. So if you are a better candidate of a consolidation loan, a debt management plan or a consumer proposal, your trustee will make sure you not only understand this, but will assist you in finding the help that you need.
After checking your 3 credit reports, your next step to improving your after bankruptcy credit should be to make a household budget. Make a monthly calendar with all of your income listed by date and schedule all of your household bills such as utilities, insurance, house payments, etc to be paid on or before the due date each and every month. The most essential element of acquiring after bankruptcy credit is to prove that you can make your payments on time. Lenders will check your household utility companies for your payment history, so make sure those are never late. Acquiring after bankruptcy credit is really just a matter of proving to your creditors that you can responsibly handle your credit and can repay your debts on time. You have to regain their trust by showing them a good payment track record.
Lenders are looking for you to be able to handle two types of after bankruptcy credit, revolving and installment. Revolving credit such as a secured credit card is the easiest type of after bankruptcy credit to attain. You make a $200-$500 deposit with the bank issuing the card, and they approve your after bankruptcy credit line based upon that deposit. But what ever you do, don't make the huge mistake of maxing out your new secured credit card. Maxing out your credit cards damages your credit score. If you want to increase your after bankruptcy credit rating, its best not to charge more than 30% to 35% of your credit limit. And it is especially important to pay the balance off in full each month. Light, regular use of your new credit card will build a solid foundation and maximize your chances of receiving a better interest rate on your next after bankruptcy credit card. Don't just grab any secured credit card though, look for one with no application fees or annual charges; you don't have to pay excessive fees to build your after bankruptcy credit. Make sure the card you choose reports to all 3 major credit bureaus. You are not building a good after bankruptcy credit rating unless your payment history is being reported regularly. Finally, make sure it converts to an unsecured card after 12-18 months of on time payments.
For example, when you submit your specific bankruptcy case to them along with all the relevant information, they will suggest you the right type of bankruptcy that you should claim for and they will provide you the right bankruptcy forms to fill. Once you submit those forms, they will review all the information you provided with the forms. If some information is missing, the online bankruptcy forms processor will inform you regarding the same and will ask you to submit the missing information.
The third responsibility you will have is attendance at two credit counseling sessions courses. These courses can be conducted individually or in groups, depending on what you have arranged you're your trustee and they are required to cover topics the essential components of our personal finance (i.e. budgeting, spending habits, re-establishing credit, etc.). The goal of these sessions is one of rehabilitation, they are designed to help review and hone your financial management skills, as well as the identification and prevention of destructive habits. The fourth thing you are required to do is the sending of a monthly report to your trustee. These reports are simply a summary of your monthly income and expenses and in order to fill them out you are required to keep receipts for any money you spend during the month. At the end of the month you are required to summarize these receipts on a form that will be provided by your trustee and provide a copy of this form to your trustee. There are certain receipts that you will have to attach to this form, but the specifics of this will be reviewed by your trustee. These are the standard duties and responsibilities that each individual bankrupt must complete. There are a few other responsibilities that may be required (i.e. attendance at a creditor meeting, attendance at an examination by the Office of the Superintendent of Bankruptcy etc), but these are relatively rare and will be discussed in more detail when you meet with a trustee of the evaluation we previously discussed. In the vast majority of cases upon completing these four duties your part of the bankruptcy is complete and you become eligible for a discharge.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Credit Suisse You have full permission to reprint this article provided this box is kept unchanged.
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