Filing a bankruptcy will stay on your credit report for up to 10 years, so it should not be surprising that some filers want to know what the steps and time frame for building good credit are after you have filed for bankruptcy.
How fast you build credit after filing a bankruptcy depends on the type of bankruptcy you file, the amount of steady income you have, and whether you are willing to risk getting back into debt.
Some people can start building their credit back the moment they file for bankruptcy. Filing a personal bankruptcy is viewed by some creditors as a reasonable response to handling a bad financial situation, and most creditors are aware of the fact you cannot declare bankruptcy again for up to eight years. Therefore, some creditors are willing to extend you credit but with a much higher interest rate.
Expect the process of rebuilding your credit to take time. It probably will not happen in months and it may even take a few years. Here are four suggestions you might want to follow that may help you in rebuilding credit:
- It will not do you any good to try and rebuild credit if you do not learn the basics of handling money. Begin to rebuild credit by resolving not to ever over extend yourself in debt again. Learn to live on a budget and live within your means. Know what your necessary living expenses are and how much steady income you make a month. Try to set aside ten percent of your gross monthly income for a cash reserve until the reserve equals one full year of your salary.
- Pay all your bills on time every month. That means you need to know what your utility bills will be. Most utility companies will help you by allowing you to cost average your bill. Make mortgage and rental payments on time. Today, most credit reports include renting and leasing as part of your credit history.
- Try to avoid making the mistake of getting into time contracts with service providers like cable companies, phone companies, and the like. Instead look for service providers with open ended contracts where you can stop the service at your discretion. If needed, use prepaid phones until you get a handle on learning to live within a budget. Most contractual service providers do not help you build credit, but they can sure ruin your credit if you fail to make their payments, and failing to do so, can lead to high interest and penalties.
- After you have learned to handle a budget for about 6 months to a year and have built a cash reserve, then look into establishing a line of credit. You will be surprised at how man credit card opportunities you will get even when you are still in bankruptcy. If you take one of the new high interest credit cards, resolve to never pay late fees, penalties or interest. That means pay your credit card bills on time.
Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation. Contact us today and we will help you find a bankruptcy attorney in your area.
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