You’re Bankrupt, Now What?

You’ve declared bankruptcy and are ready to start a new financial life. Your credit, which may have already been shaky, has taken a significant hit. While a Chapter 13 bankruptcy will stay on your credit report for seven years, and a Chapter 7 for ten years, that doesn’t mean it will take that long to rebuild your life. At Perez and Perez in Lafayette, IN, we can help you before, during and after you declare bankruptcy.

Instead of feeling guilty or ashamed, you should learn from the past and resolve to move forward. One of the first things you should do is prepare a budget and stick to it. If you feel that you may not be able to do that, consider budget counseling. Even if your old debts have been forgiven, you will have new bills, such as utilities and living expenses going forward. It’s imperative that you pay for all of these on time. Setting up automatic payment plans are one way to stay on track. The key at this point is to cut back and avoid any late payments.

The next step is to begin rebuilding your credit. You will be bombarded with credit offers right after the discharge. These are usually high fee cards offered by creditors who know you want to start rebuilding. Avoid any cards with high fees.

It is best to wait a few months after your discharge, then contact a reputable bank to apply for a secured credit card. It operates like a debit card in that you deposit a set amount into a bank account and that becomes your credit limit. Then, you charge a small amount each month– never max out the credit limit — and pay it off on time. After about a year of timely payments, you may even be offered an unsecured card by the issuer, and if nothing else, you will have some positive payment history on your credit report.

The old adage, “time heals,” is especially appropriate when it comes to bankruptcy. Right after filing, the timeline to financial solvency may seem daunting, but by taking those first steps towards financial responsibility, you’ll be well on your way to lower fees and rates, as well as a new life.

If you would like more information, please feel free to contact us at (765) 588-5080 to make an appointment