WILL IT DESTROY MY CREDIT?
No. Most clients already have bad credit because they’ve fallen behind. Bankruptcy simply provides a fresh start. It wipes the slate clean and you can start rebuilding your credit. It sounds unbelievable, but the truth is for most people, their credit score IMPROVES shortly after filing bankruptcy.
WHAT IF MY CREDIT IS GREAT NOW?
Then, yes, the bankruptcy will be an initial blemish – but it’s still often the right decision. Why?
People with great credit who are simply carrying their minimum payments that they have no hope of paying off their debt have what I like to call a “smoke and mirrors” credit rating. It may be a high score, but if your debt to income ratio is such that you’re never going to pay off the debt, then you will eventually hit that financial wall.
The bankruptcy will initially bring down your credit score, and then within about 15 months you will see that score rising IF you do the right things.
HOW DO I REBUILD MY CREDIT?
It’s simple – regular timely payments. Your bankruptcy might be on your credit report for ten years, BUT that does not mean your score will be poor for that time. After your bankruptcy you should get at least one credit card and use it just for your food and grocery shopping and pay it off every month timely. Don’t build a balance – only spend what you can pay off that month. Each month you make a regular and timely payment you are BUILDING your score back up.
Do NOT pay anyone who says they can build and repair your credit. YOU can do it yourself by simply making regular and timely payments.
The worst thing you can do is simply decide after your bankruptcy to never take credit. You will be off the radar and have no credit history. Obviously, if your debt was the result of mismanaging credit cards then obviously you must be careful about taking a future credit card. But again, if you simply use it for monthly expenses that you can pay in full at the end of each month, you will use that initial post-bankruptcy credit card to build your credit.
Many people wonder if they will be able to ever buy a car or a house again. Absolutely and probably sooner than if you didn’t file a bankruptcy and simply carried the debt longer, while it grew! It may take up to two years of regular timely payments, but you should be able to qualify for loans assuming your employed and meet the other criteria. Your credit will not be the issue.
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