One of the primary concerns that people have when they are filing for bankruptcy is how the filing will impact their financial status in the upcoming years. There isn’t any easy answer for this because there are many factors that can affect how a bankruptcy impacts you.
Filing for bankruptcy is going to impact your credit. The initial impact will be negative, but there are ways that you can start to rebuild your credit. You must ensure that you are taking things slowly and remembering that you must use credit wisely. Here are some points to remember about rebuilding your credit after a bankruptcy:
Plan your rebuilding strategy
You have to decide what you are going to do to rebuild your credit. The last thing that you need at this point is to blindly try to get credit. Applying for a bunch of cards and other credit lines can actually cause your score to go down even more.
Ideally, you will need to show potential creditors that you are worthy of credit. This means keeping your debt-to-income ratio low so that they know you will be able to make payments on the accounts that you are allowed to open. Of course, you need to wait until you are out of bankruptcy to apply for new lines of credit since it is illegal to have new accounts unless you have the trustee’s permission prior to the discharge.
Think outside of the box
You might not be able to get a traditional credit card or loan at first. Instead, you may need to consider getting a secured card that will link to your credit report so that you are establishing your trustworthiness. You might be able to obtain a store credit card. In many cases, store lines of credit have credit requirements that are easier to meet than traditional credit cards.
Some people can qualify for a car loan or a home loan once the bankruptcy discharges. Prior to trying to do this, you should find out what the requirements are. There is no point in having a hit to your credit from an inquiry when you don’t meet the minimal requirements.
Bankruptcy is a strategy that you can use when you need to take back your financial health. This isn’t an easy way out of debt, but it can help responsible adults to get a second chance with credit. Make sure that you are thinking carefully about your options and file the appropriate chapter of protection.