Despite anything you may have heard, bankruptcy does not ruin your credit forever, and it is still possible to get a loan after a bankruptcy discharge. In reality, bankruptcy — a legal way to have many debts forgiven — is a new beginning, and it can give you a fresh financial start. There are things you can do after a bankruptcy discharge to begin rebuilding your credit.
Bankruptcy will stay on your record for up to 10 years after filing, but there are still ways to rebuild your credit and live a happy financial life after bankruptcy. In fact, many lenders are more likely to give you a loan after a bankruptcy, because they know that once your major debts have been discharged through bankruptcy, you are much more able to make payments.
The skilled and seasoned Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer understand that even the most well-intentioned people can find themselves in a financial hole. We offer a free consultation to evaluate your personal situation and help you take steps to ensure you can stay solvent and reach your financial goals. Start rebuilding your life today by calling our office or contacting us online for your free consultation.
What Bankruptcy Can Do
The most common types of bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy allows you to discharge many types of debt quickly, often in a matter of months. It stops, prevents or resolves collections, loan deficiencies, repossessions, wage garnishment and civil judgments. While you might have to sell property to help pay off creditors, there are many Ohio bankruptcy exemptions; if you do not own much property, your possessions may all be exempt, qualifying you for a “no asset” case.
Chapter 13 Bankruptcy allows you to reorganize assets and consolidate your payments to avoid fees and fines and repay some or all of your debt affordably over a three- to five-year period. If you complete your court-approved repayment plan, you will receive a discharge that eliminates most of your remaining debts.
Rebuilding After Bankruptcy
After you receive your bankruptcy discharge, you need to be cautious and avoid the kinds of mistakes that got you into difficulty in the first place. You will have to make changes in your lifestyle, rebuild your credit, and take steps that will keep you financially solvent while still able to enjoy your life.
To do this, we suggest:
- Make a budget and stick to it. To avoid drifting back to old spending habits, you should take the time to create a budget that considers your income and expenses. Start by budgeting for your major regular expenses that maintain the necessary basic costs of living each month. Consider setting up automatic payments for regularly occurring expenses such as rent or mortgage payments, car payments, property taxes, and insurance, so they are taken care of immediately. Look for areas where you can cut unnecessary spending. Pay bills on time and don’t buy anything unless you can pay for it by the end of the month.
- Rebuild Your Credit. Filing bankruptcy is the first step in repairing a damaged credit score. If you have any credit cards left after bankruptcy, use them wisely. If no cards remain, you can re-establish good credit by starting with a secured credit card from your bank, depositing money into an account as security. Your credit limit will equal the amount in the account. You rebuild your credit by paying on time, and the bank will report your payments to the credit bureaus.
After using the secured card successfully, you can apply for a gasoline or a department store charge card and eventually can get a regular charge card. Make sure not to get too many cards you can’t keep track of and not to charge anything that you cannot pay off completely each month.
- Open Checking and Savings Accounts. Begin to save some money, even a small amount, by opening checking and savings accounts in a local bank or credit union that doesn’t charge fees. Saving money for something you want helps you avoid impulse buying, and it allows you to have money put aside for unforeseen emergencies such as a car repair.
- Check Your Credit Reports Regularly. Get credit reports from each of the three major credit reporting agencies for free once a year. Make sure there are no errors and that all of the debt discharged in your bankruptcy is being reported to the credit bureaus with a zero balance so it doesn’t count against you as outstanding debt. It may take several billing periods for creditors to rectify their accounts, and some stop reporting to the credit bureaus altogether after a bankruptcy, so keep on top of your situation.
- Be Aware of How Expenses Add up. Little expenditures for things you don’t need add up to big spending. Find ways to curb impulse spending, such as making a list and shopping just for what is necessary. Review receipts and expenditures on a weekly basis so you can keep better tabs on where your money is going. And if big ticket expenses such as fancy cars and homes and expensive vacations and restaurants caused your problems, you will have to change your lifestyle.
- Consider Buying or Keeping a Home. If you managed to keep your house through bankruptcy, make sure you reaffirm the loan while your bankruptcy case is active, so the lender will report future payments to the credit bureaus. If you are hoping to buy a new home, lenders will consider factors such as the nature and duration of your employment, your income, how much you have saved for a down payment, and how you managed any debts that may have survived the bankruptcy filing. Most lenders will require you to have been out of bankruptcy for one year before they will consider you for a car loan, and at least two years before you would be considered for a home loan.
Contact Us and Get Help
The seasoned and compassionate Ohio debt relief attorneys at Fesenmyer Cousino Weinzimmer understand that building life after bankruptcy is not an easy process. We offer a free consultation to help you get started by evaluating your entire financial situation — your income, your debts and your goals. We will make sure you are aware of all your options and walk you through the steps to find the path to a brighter future that makes sense in your individual case.
Delaying can only worsen your situation, so call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today at one of our conveniently located office branches or email for your free consultation so we can determine what solutions will work best for you.