The relief that comes once your bankruptcy is settled is freeing and liberating. Your debt is behind you and you’re making a new start. While my main role as your attorney is to get your bankruptcy taken care of, I also want to make sure you have some tools and resources to help you get back on your feet. Additionally, I want to ensure that you know what to expect as you’re recovering from your bankruptcy.
Improve Your Credit Score
Your credit won’t automatically improve with the passage of time after a bankruptcy—you’ll need to take some strategic steps to rebuild your credit. As scary as it can be for some people, the best way to start building your credit is to get a credit card. Don’t be surprised if you have to start with a secured card, which requires a deposit. Your credit limit will most likely be low and you may begin with a high interest rate, but the key is to use this new credit wisely. Make small purchases and pay them off completely and on time each month. Over time, your credit score will improve, which will help you to get lower interest rates on future loans. You can also negotiate with your credit card company to get a higher credit limit and lower interest rate.
Although you’ll get offers for auto loans almost immediately after your bankruptcy, I’d caution you against taking advantage of these offers. The interest rates are usually incredibly high, which means you’ll pay much more than you should for a car. By deliberately using your credit cards to improve your credit score, within a couple of years you’ll be able to buy a new car with a great interest rate and lower monthly payments. If you absolutely need to buy a new car right away, you’ll find companies will be wiling to work with you. Be sure you get into a payment that you can afford, and remember, after your credit improves, you can refinance your auto loan.
As your credit improves, you’ll also be able to purchase a home. The length of time you’ll need to wait, interest rate, and down payment all depend on your credit prior to your bankruptcy and the type of loan you’re trying to qualify for. It’s not uncommon for people to purchase another home in just a couple of years.
Sometimes moving on from bankruptcy literally means moving to a different home or apartment. Whether you’ve sold your home or are moving to a more affordable apartment, a credit check is inevitable, but don’t let that worry you. For some landlords or property management companies, a bankruptcy is an automatic “no”, but for most, they just want to make sure you have enough disposable income to pay your rent. You might consider attaching a letter explaining your finances to your new landlord.
If you’re moving on to a better or different job after your bankruptcy, your employer might also run a credit check. Your potential employer will need to ask permission before checking your credit, so let them know that they’ll see a bankruptcy, while briefly explaining your circumstances.
Get Back on Track
If you’ve been dealing with overwhelming debt and are ready to make a new start, give me a call. We’ll put your debt behind you so you can start rebuilding your credit and life.