When you emerge from a personal bankruptcy and the overwhelming burden of your debt has been lifted, you can relax some. However, it is important that you don’t fall into the trap of thinking that your work is done. As soon as possible, you should begin rebuilding your financial stability as well as your credit score.
You have probably heard that a bankruptcy notation can remain on your credit report for seven to 10 years, depending on what type of case you filed, but that does not mean that you can’t improve your credit rating. It may take a lot of work and patience, but most individuals are surprised at how quickly they start to see their score improve.
You will likely need to begin by obtaining a credit card. This may seem counter-intuitive since credit card debt is one of the primary causes of bankruptcy, but hopefully you have learned from any past mistakes. It is important to select a card that has the lowest interest rate and fees available to you. You may even want to start with a secured credit card, which is one that requires you to deposit funds in a bank account that the lender can draw against if you fail to make your payments. Whatever type of card you choose, however, it is vital that you make timely payments in order to improve your credit score as well as to protect your fresh financial start.
As time passes and you continue to make timely payments, you will hopefully see the interest rate on your credit card decrease while your credit rating increases. If you have not seen an improvement in your credit card interest rate and fees after one year of timely payments, you should contact the issuer of your card and negotiate better terms.
The longer you can prove to lenders that you are dedicated to making timely payments, the more likely you are to qualify for vehicle loans and even mortgage loans. Initially your interest rates may be high, but as your record of making payments continues, you may be able to refinance these loans for better terms.
The most important thing you can do post-bankruptcy is to live within your means. Maintain low credit card limits, pay your bills on time, and build your savings so you are prepared if an unexpected negative event should occur. Lenders may be willing to extend credit or loan money to you because they know you cannot file bankruptcy again anytime soon, so make sure you don’t fall into any bad spending habits.
If you are considering filing a Chapter 7 or Chapter 13 bankruptcy, we can help. We will be by your side through the entire process providing you with the advice and guidance you need. Contact us today to learn more.
We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..