How can I rebuild my credit after a bankruptcy?
It is possible for Tennessee residents to rebound from a bankruptcy and successfully establish positive credit again.
Filing for bankruptcy can be both a very defeating and very liberating experience for Tennessee residents. On one hand, it can be emotionally stressful to be under the type of financial pressure that leads to a bankruptcy. Filing for Chapter 7 or Chapter 13 may even feel like losing the battle against debt. On the other hand, the ability to get out from under what was an unmanageable level of debt gives people the chance for a fresh start and a better financial tomorrow.
When looking forward, just how can a consumer move forward financially after bankruptcy?
Review credit reports
According to NerdWallet, an essential first step for anyone starting out to rebuild credit is to know where you are today. Credit reports from all three agencies should be ordered and reviewed. Any errors noted should be addressed before anything else is done.
Get new credit
The only real way to re-establish a positive credit history is to obtain new credit. For people who have experienced problems like late or missed payments that are often preludes to bankruptcy filings, secured credit options may be useful. Some credit cards may be obtained that require deposits made to the banks. Consumers then use the credit cards and the deposited money essentially acts as collateral. These are great stepping stones to traditional credit cards.
There are some forms of secured loans as well. These may work similarly to secured credit cards. Local banks or credit unions may be better places to approach when requesting secured loans versus large national banks.
Bankrate recommends against using payday loans as they often have exorbitant fees that hurt consumers’ efforts to get back on track financially.
Use and repay new credit
Once a post-bankruptcy consumer obtains a new form of credit, the best way to show responsible behavior with it is to use it but with care. All payments must be made on time. It is also wise to avoid using all credit that is provided. If a credit card has a $1,000 limit, the full $1,000 should not be used.
Wait on applying for a mortgage
Getting a mortgage after a bankruptcy is possible but not generally right away. Consumers should wait some time before seeking a new mortgage. The New York Times indicates that it may take between one and four years before a person may be able to get a new home loan after a bankruptcy.
Talk to an attorney
When financial problems get out of control, Tennessee residents are encouraged to talk to an attorney. Understanding not only the details about bankruptcy filings and processes but also what may happen after bankruptcy is important.