About four years ago, I could tell that things were turning south with my business. Cash flow was tight, and customers simply weren't coming back to shop some more. I realized that if I was going to keep my house, I would need to do something to resolve my finances. Although it was scary, I decided to meet with a bankruptcy attorney. After I explained my situation, he helped me to understand the process and how to tell if it was a good idea or not. When I decided to do it, things started changing for me right away. This blog breaks down bankruptcy in layman's terms, so that you can decide whether or not it is right for you.
You've filed for bankruptcy and your debts have been discharged. Your bankruptcy will remain on your credit report for the next 10 years. That doesn't mean you have to wait 10 years to reestablish your credit.
It may seem strange but many creditors will see you as a good risk once your bankruptcy is discharged. Why? Well, creditors know that you won't be able to file bankruptcy for another 10 years, which means they'll be able to go after you if you fall behind on your payments. Here are three simple ways to reestablish your credit after bankruptcy.
Pay Your Bills on Time
If you didn't include all your debt on your bankruptcy – such as a car or house – make those payments on time. In fact, pay them early each month. If your budget will allow, pay a little more than the minimum payment required. Not only will it look good to your creditors, it will also pay down your debt quicker.
You may not know this, but a large portion of the minimum monthly payment goes towards the interest on the debt. However, when you pay more than the minimum, the extra goes directly towards paying off the principal.
Apply For a Credit Card
If you discharged all of your debt, you're going to need to open a new account as soon as possible. This will allow you to reestablish your credit through timely payments on your new debt. Apply for a credit card that will allow you to make small purchases, such as a jewelry store.
Once you have your new credit card, use it wisely. Purchase one small item and make your monthly payments on time. Once you've paid that item off, purchase another small item and pay it off with monthly payments. In most cases, your credit line will be increased once you've made several on time payments. That credit increase will help raise your credit score.
Don't Pass Up Secured Cards
Not sure what a secured credit card is? With a secured credit card, you deposit a specific amount of money – say $300 – and the credit card company approves you for a $300 line of credit. If you don't make your monthly payments, your $300 is used to clear the debt.
However, if you continue to make timely payments, your line of credit is increased, and your credit line is changed from secured to unsecured. When that happens, you get your security deposit back.
Now that you've filed for bankruptcy (such as professionals of bankruptcy in Edmonton), you have the opportunity to build a healthy credit history. The simple tips provided above will help you rebuild your credit.Share
2 September 2015