It's not uncommon for people to assume that if they file bankruptcy, their credit score will be ruined, they won't be eligible for credit cards and they will have a difficult time qualifying for loans. This is not the case.
The reality is that most people can begin rebuilding their credit and qualify for a low balance credit card within a relatively short amount of time after filing bankruptcy. If you remain current on your credit card payments and continue to pay off your monthly balance, your credit limit will be increased over time. As your credit limit increases, your credit score should increase if you maintain a low debt to income ratio. As your credit score improves, you should qualify for certain kinds of loans.
At Ambrogio, Pletter & Associates, LLC, in Stratford, Connecticut, we prepare clients for life after bankruptcy by explaining the steps they can take to rebuild their credit. To discuss your situation with a lawyer in Stratford or Bridgeport, or to learn more about what our past clients say about us, call 203-502-7436.
Life After Bankruptcy: The Facts
The three credit reporting agencies — Equifax, Experian and TransUnion — look at a number of factors when determining a person's credit score. Until your credit score improves, it may be difficult to qualify for car loans, a mortgage or certain kinds of consumer loans. That's why it's so essential to take steps that will improve your credit score.
- Chapter 7 bankruptcy can stop harassing calls from debt collectors, allow you to discharge unsecured debts and delay foreclosure.
- Chapter 13 bankruptcy allows you to restructure your debt, save your home from foreclosure and avoid repossession of your cars.
Establishing Good Credit After Bankruptcy
A simple, yet effective, means for improving your credit score is establishing a pattern of dependability. If you make regular monthly payments on your credit cards, maintaining a zero or low balance, your credit score will improve. In general, a low debt-to-credit ratio will work in your favor. That's why it's so important not to cancel a credit card even if you've paid off the balance: not only will its cancellation lower your debt-to-credit ratio by removing some of your available credit, but doing so could also be interpreted as an indication that you are having financial troubles.
Rebuilding credit is a function of careful money management and living within your means. Doing so establishes a history of financial stability that will positively impact your credit score. A number of simple steps can be taken in order to begin rebuilding your credit after bankruptcy, including:
- Obtaining new credit — for example, obtaining loans as a co-signer
- Paying insurance, utilities and other bills on time
- Showing evidence of financial stability
- Paying down credit card balances every month
- Not canceling existing credit card accounts
- Maintaining a low debt-to-credit ratio
- If possible, avoiding consolidation of credit cards into one high balance card
Once these measures have been implemented, an individual's debt-to-credit ratio should improve.
Establishing A Budget
As a part of our bankruptcy services, we work with each client to develop a post-bankruptcy budget — encouraging him or her to keep track of spending, and where his or her money goes.
For a debtor, it is critical to start the habit of saving money — even as little as $20 a month. At Ambrogio, Pletter & Associates, LLC, we provide money management guidance that helps people determine and maintain a budget while rebuilding their credit.
Contact Us In Stratford Or Bridgeport
We can help you find the light at the end of the tunnel, help you take control of your finances and get a fresh start. Contact an attorney at 203-502-7436 to learn more. We offer a free initial consultation.