Posted by Dewey Kearney on August 2, 2010
Many people who are forced to go through a bankruptcy feel that their “credit life” is all over. They have been told by friends that the bankruptcy will stay on their credit report for up to 10 years (true) and that they will never be able to get credit from anyone until that is taken off their credit report (untrue). They have also been told that their credit score will remain in the basement practically forever (also not true).
If you have a lot of debt then your credit score probably is in the tank anyway and until that debt is taken care of your credit score will remain in the tank. However I have some good news! Once your bankruptcy is discharged (approximately 60 days from the time it is filed) you can start to rebuild and if you want to have any kind of a life you must. Should bankruptcy be your first flinch when you are over your head in debt? No you should try to work things out with the people you owe. If however you have tried all this and it hasn’t worked then it’s time to take a proactive approach.
About 20 years ago I was in the same condition financially. My debt had gotten totally out of hand and I was unable to get a handle on it. Creditors were calling all the time, my wife and I were in total despair. Someone that I respected sat me down and talked to me like a good friend is supposed to. The next day I spoke to a bankruptcy attorney and things never looked so bright. After this things started to get better. The harassing phone calls and threats stopped. Best of all, my beautiful wife started to smile again. If this sounds like you let me encourage you to take two minutes to fill out the form and you will be put in touch with one of our bankruptcy attorneys. We have them in practically every city in the country. There is no charge to speak with one of them so what do you have to lose besides a mountain of debt?
Then we can start rebuilding your credit. You need credit and probably will not qualify for an unsecured card. So what do you do? Get a secured credit card. The pre-paid ones are really just a debit card and do not report your payments. They will not help increase your credit score but a secured credit card will. If you don’t take action to rebuild your credit score it will remain low. You can’t take the “cash only” approach in this day and age. You need credit and must begin rebuilding as soon as your bankruptcy has been discharged.
What you must have is a secured credit card. A secured credit card requires a cash deposit as collateral in return for being granted a credit limit. Many of those who sign up will be granted a far higher limit because of the minimal risk that the lender faces. It also means that, unlike an unsecured credit card for bankruptcy, approval is guaranteed. The lender will report all monthly repayments to credit reference agencies. After about 12 to 18 months of making your payments on time you probably will qualify for an unsecured credit card. But start and watch your credit score climb! You can and will soar like an eagle once again!
Posted by Dewey Kearney on June 28, 2010
Now that everything is over you’re probably realizing you’re not sure of what to do next—what happens after bankruptcy? Well, not much–unless you make it happen.
All of your past debts on your credit report should be marked down as “included in bankruptcy”. After your bankruptcy has been discharged order a copy of your credit report and make sure everything you have listed in your bankruptcy has been noted as such because often companies will leave your past debts marked as overdue or late. Have those negative items noted as included in the bankruptcy. When you notify the credit reporting agency be sure to include the case number so they can verify it.
If you let your past problems make you feel ashamed, and avoid doing anything about your finances after bankruptcy then your credit score will remain very low. Keep in mind that this is but one moment in time and in time this will all age off of your credit report. Now is the time to build a new credit history.
In order to build up a new credit history, and a new life, you need to take charge and make things happen. Get a secured credit card and this will be the first step in rebuilding some new credit history. Use this new secured card lightly, less than thirty percent of your limit, and pay it back each month to show that you have learned from past mistakes.
The second step is to build up an emergency fund. While this won’t directly affect your score, it is a discipline that will help because if something breaks you’ll use your savings instead. With $1,500 in a savings account when you have unexpected expenses you’ll be prepared.
The third piece in this puzzle is a newer automobile. Many people feel that they won’t qualify for an auto loan but with the current economic problems that isn’t so. However you probably won’t qualify for a loan from a major bank. Get pre-qualified for an auto loan, go shopping and have fun. If you have a steady income of at least $1500 per month you will qualify. Being pre-qualified you will be given an approval notice that you give to the auto dealer when you select your new car. Don’t let them talk you into more automobile than you are prequalified for; they will try. Stay with the plan otherwise you will be in trouble again. The interest will be a little higher than you prefer but that cannot be helped now. That will improve down the road.
You may be inclined to sit back and avoid your finances after everything you’ve been through, but if you don’t make it happen, nothing will happen after bankruptcy, and eventually you’ll come to regret that. Build up a new healthy financial history and you will be pleasantly surprised at how quickly your credit score rebounds.
Disclaimer: This information has been compiled and provided by www.1-800BadCredit.com and www.1-800BadCreditBlog.com as a service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person’s situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.
Posted by Dewey Kearney on May 28, 2010
I wanted to post this story about my friend (and co-worker) Josie to help you to understand the difference between a “prime” card and a “sub-prime” (a.k.a. bad credit) credit card.
Josie went through a bad patch about 8 years ago. She had some medical bills that got away from her. Another company had her wages garnished and because of this she was unable to pay her rent and wound up being evicted. These things caused her credit score to plummet and at one point she couldn’t even qualify for a cell phone, and the land line company wanted such a large deposit that instead of having a phone she walked to the local gas station to make calls!
Josie’s been working hard to improve her credit. Last year she was able to qualify for a cell phone with a major carrier at no extra down payment. But she was still getting turned down for credit cards through major banks like Chase, HSBC, the credit union where she has an account, and even stores like Target. She was getting frustrated.
At my urging I convinced her to apply for the American Dreamcard. She insisted on applying for a Chase card through Amazon first, even though I cautioned her about applying for a “prime” card. Naturally she was immediately turned down. American Dreamcard however surprised her by giving her an unsecured MasterCard with a $300 balance.
You might be saying, “big deal. $300.” But it’s a big deal to Josie because none of the major banks would approve her! So now she’s got something to start with. For the next 6 months she’s going to make small charges and pay them off. And after that she can contact American Dreamcard and ask to have that balance raised, and they’ll probably do it! Within 6 months of that they will probably lower her rate if she asks for it. And soon after that she’ll have established her credit worthiness and probably be able to get a credit card from one of the big companies that previously turned her down.
Moral of the story: If you KNOW your credit has suffered some blows recently don’t apply for cards that don’t want you, apply for the ones that do!
If you’re credit history is spotty, or you went through a bad patch a couple years ago then the American Dreamcard will probably approve you.
If your credit is poor because of recent (1 to 2 years) issues then consider applying for an Orchard card. Orchard Bank states that they are an excellent card for someone wanting to “rebuild” their credit. That’s the language you need to hear!
Once you get a bad credit credit card use it wisely to “rebuild” your credit. Within a year or so you’ll be well on your way to establishing yourself and proving to the lenders that you are trustworthy and can negotiate for a higher balance and lower interest rate.
