How to Rebuild Your Credit After Bankruptcy
Apr 30, 2018
You have filed bankruptcy, got out of debt, and now you want to start to rebuild your credit. The good news is just because you filed for bankruptcy doesn’t mean that your credit is ruined for 10 years. If you take the appropriate steps to rebuild your credit, you can qualify for a FHA home loan in two years! So how do you start to rebuild your credit?
SATISFACTION OF JUDGMENTS
If you had any money judgments filed against you, make sure that you file the Satisfaction of Judgement Due to Bankruptcy and other supporting papers with the state court. The bankruptcy took care of the fact that money was owed on the debt; however, the judgment was taken in state court and the bankruptcy was filed in federal court. The two courts do not communicate, hence the need to file the additional paperwork after you receive your bankruptcy discharge.
This is something you can do yourself with the forms found on the state website for a $5.00 filing fee per judgment or you can retain your bankruptcy attorney to draft and file them for you for a small fee. Typically, the cost is not included in your bankruptcy retainer due to the fact that not everyone has money judgments and that the court charges a $5.00 per judgment so the amount would be different for every case.
If you had any secured debts when you filed bankruptcy, like a home or car loan, you had the option to keep the debt and the asset attached to the debt by entering into a reaffirmation agreement with the creditor. By entering into a reaffirmation agreement with the creditor, the creditor will again report your payments to the credit bureau. It is very important that you stay current on any reaffirmed debts because they can either help your credit score improve or hurt your credit score if you fall behind. Keeping a secured debt is not always the best option. To learn more about secured debts, read our blog “Chapter 7 Bankruptcy: Reaffirming Secured Debts”.
Errors on credit reports are very common. In fact, one in five Americans have an error on their credit report. Whether you have filed bankruptcy or not, errors on your credit report can hurt your credit score. Since errors on credit reports are so common, it is imperative that you check your credit reports on a regular basis. You can obtain a free credit report from the three major reporting bureaus once every 12 months at www.annualcreditreport.com. If you find errors on your report, you can review our blog “How to Fix Credit Report Errors.”
SECURED CREDIT CARD
A secured credit card requires a cash collateral deposit that becomes the credit line for your account. For example, if you put $500 in the account, you can charge up to $500. Secured credit cards are one of the easiest ways to build credit and improve your credit score. However, while you are trying to improve your credit score, it is extremely important that you pay off your balance in full every month. This will help you improve your credit and you will not incur interest on your debt. If credit cards were a major reason you filed bankruptcy, please proceed with caution. Do not use the credit card for purchases that you will not be able to pay off in the same month.
Bankruptcy will be on your record for 10 years, but don’t lose hope. By taking the appropriate steps to rebuild your credit, you can be in a much better place financially for your future. Pedersen Law Office, LLC offers free consults in all of our areas of practice and will meet with you personally to discuss your specific circumstances and see what options are available for you. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.