Life after bankruptcy
Those considering bankruptcy frequently worry that they will never get credit after a bankruptcy, or that it will be 10 years before they can get credit.
Can I keep a credit card?
Can I get new credit?
Can I ever buy a home?
Is my credit record ruined?
Can I keep a credit card out of the bankruptcy for use later?
If you owe money on a credit card at the time you file bankruptcy, you must list the card as a debt. Remember, the schedules are filed under penalty of perjury: perjury in connection with your case can lead to denial of discharge of all of your debts. It is also a federal crime.
Most credit card companies will allow you to keep their credit card for use after bankruptcy if you agree to reaffirm the balance on the card and enter into a new agreement, signed after the bankruptcy filing. The decision is up to the creditor, but most creditors want to avoid the loss incurred when the debt is discharged, and want your future business.
Can you still get a Federal guaranteed student educational loan after you have filed bankruptcy?
Unlike most credit, the granting of government guaranteed educational loans is not based upon credit history or income. They are instead extended if you meet the statutory and administrative criteria. Although default on an existing educational loan may effect your ability to get a subsequent loan, the filing of a bankruptcy in itself should not. As a matter of fact, under § 525 of the Bankruptcy code the government is restricted from discriminating against those who have filed bankruptcy. For more information on educational loans, you can check with The Financial Aid Information Page, or the financial aid office at your local college.
Will I Be Able To Buy A House If I File Bankruptcy?
Probably. There are two issues to consider.
First, lenders like to see two years of good credit after a bankruptcy is resolved. However, there are instances where lenders will finance with a year of good credit.
Second, lenders want to know why you have gone bankrupt. There is a substantial difference between a bankruptcy that is caused by reckless financial habits and simple financial disasters -- a car wreck, medical costs, the plant closed after 30 years, the town was underwater for three weeks, etc. In other words, not every bankruptcy is a by-product of financial negligence.
Some advise to Re-Building Credit and manage After Bankruptcy
1- Open a checking or savings account.
2- Pay your bills automatically from your checking account each month so that you can always be sure to remain current with new obligations.
3- Ask your employer to take 10% of your pay check and deposit it into your savings account. This will help you save for emergency expenses.
4- Once you have saved up three (3) month's worth of salary in your savings account, ask your bank for a secured loan against the account. Pay the entire loan back on time so it is reflected as a positive mark on your credit report.
5- Pay your utility bills and rent on time.
6- Stay away from payday loans.
7- Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.
8- If you have any debts that survive the bankruptcy, pay them on time every month. This will show new potential lenders that you have the ability to repay your new debts on time.
9- Check your credit reports every six months and make sure that all information is accurate. You should correct credit report inaccuracies so that potential new creditors will know which debts are no longer your responsibility.
10- Minimize the number of inquiries on your credit report. Every time a potential creditor make an inquiry into your credit, your credit score can go down.
The Fair Credit Reporting Act (Please Understand Your Right)
All Federal Laws are in the consumer's favor and you will have the advantage, especially with the Federal Fair Credit Reporting Act. This is because when you dispute any information contained on your credit report, the Credit Bureau must verify the accuracy of the information with the creditor who reported the information within 30 days, or it will be removed.
You have the right to correct, update, amend and tell your side of what happened to the credit community. These laws do not help you unless you use them.
Because the Fair Credit Reporting Act include rules that credit bureaus and your creditors must follow when reporting your credit file, as well as giving the consumer certain rights, you can afford to be defensive about your credit report. Remember that credit bureaus are not your friends. They are just private companies selling information about you.
Your Six Basic Rights under The Fair Credit Reporting Act
1. You have the right to challenge the accuracy of your credit report any time.
2. The credit bureaus must reinvestigate anything you challenge without a charge.
3. The credit bureaus must reinvestigate within a reasonable amount of time--30 days, unless the bureau notifies you otherwise.
4. If the credit bureau finds an error in the challenged item, they must delete or correct that information in your files immediately.
5. If the credit bureaus cannot or do not confirm the challenged item within 30 days, they must delete that information from your files immediately.
6. You have the right to submit a Consumer Statement of your view of the problem. If you, as a credit consumer, dispute the accuracy of certain information in your credit report and it is verified by the creditor as correct, then the credit bureau is required to include your explanation of your dispute, if you request, in your credit report. Limit your explanation to no more than 100 words.
Contact Us
Contact us for more advice on how to improve your credit score. Our attorneys know the decisions you are about to make will affect your future. We maintain office hours 5 days a week and can meet with you in the evenings or on weekends. Flexible payment plans are available.
Mortgage After Bankruptcy
While it is true that bankruptcy can deal a serious set back to your credit standing it is by no means the end of the credit line. With the competitive lending market that we live in, credit companies will start soliciting you the day after you leave your bankruptcy hearing. In fact, most people can get a mortgage and credit soon after bankruptcy but not all of it is good to have. Some offer credit at a high interest rate or with high annual fees which are not necessarily the best option for people trying to rebuild their credit because of the expenditure. Your best recourse is to open a savings account and have it linked to a secured credit card this would allow you to rebuild your credit while at the same time hold a certain amount of money in a savings account for a time period. This type of credit typically charges less interest and helps you to establish credit by having a steady amount of money in a savings account. It is a good idea to keep track of your credit score and make corrections if necessary. You should also send letters to the credit reporting agencies explaining the reasons for your bankruptcy.
Watching out for credit-repair scams
Credit-repair companies can't do anything legitimate that you can't do for yourself. Some are shady, some are not, and you have to be on the lookout for scams.
One common ploy that credit-repair hustlers use is repeatedly disputing negative but truthful information on your credit report, hoping that the credit bureau drops the ball, doesn't investigate the dispute and, as a result, has to delete the item. Credit bureaus are onto this game, and they don't like it. Even when your credit repairer succeeds in getting a legitimate item off your report, the chances are good that the credit bureau will look a little harder in the future and put it right back in.
A New Beginning after Bankruptcy
Filing bankruptcy is a financial last resort – an option that should be decided upon only when there are no other options left for debt relief. Not surprisingly then, the impact that filing has on one’s credit report and score can be dramatic, and filers must work slowly but surely to regain their financial footholds.
Despite some of the negative consequences of bankruptcy, however, life after bankruptcy can be viewed as a brand new financial beginning. The first thing to do to re-start your finances is to realize exactly how your credit has been affected by your decision to file.
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A New Beginning after Bankruptcy
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1(313) 982-0010
Michigan Bankruptcy Attorneys
