Is There Life After Bankruptcy Chapter 7
Life after filing chapter 7 bankruptcy can mean freedom from your old debts, no more threats from persistent creditors and the ability to start a new life with a clean slate. However, the only problem you will have even if you are discharged your chapter 7 bankruptcy record will remain on your credit report for up to 10 years.
Being discharged from bankruptcy can be a great weight of your shoulders however, it does not mean you can continue your life where you left off. The key factor is that bankruptcy will affect your credit worthiness and your ability to qualify for credit in the future.
First Step To A Fresh Start
This does not mean it will be impossible to obtain credit however, it will not be as easy as it was before you declared bankruptcy. After chapter 7 there are certain things you will not be able to do namely buying a home. For this you will need to wait at least 2 to 3 years after you have been declared.
The key thing to start your new life on the right track is to ensure you do not fall into the same debt trap that got you into trouble in the first place. There are many reasons outside of peoples control that cause them to fall into debt. This can be the loss of a job, injury, mental problems or poor health. The most important thing to ensure you give yourself the best chance is to manage your finances responsibly from now on.
The Art of Budgeting
For the best start in life after bankruptcy discharge is to learn how to budget. It is easy to see why people many people experience debt problems because most of them have no idea about the amount of money coming in and the amount of money going out.
By creating a budget you will have a clearer picture of your income and expenses each month. With a budget you can track where your money is being spent and how much (if any) is left over at the end of the month. One sure way that people get into debt is that they simply spend more money than they earn. This is very easy to do if you do not budget.
Creating a budget involves making a list of your income and expenses and calculating the totals per month. This also helps you see where your money is being spent and where you can make savings. The key aim of a budget is not to overspend and to have a surplus at the end of month that you can use to either clear any outstanding debts are too save it for investments are a nice vacation.
Budgeting takes a little bit of practice and discipline for it to work. But like anything else the more you practice the easier it becomes. It is a good idea to take budgeting or debt management classes as most local colleges offer evening classes on how to set up a budget. There is also a vast array of excellent books for beginners so that you can learn at home.
Secured Credit Cards
One of the most important things after a chapter 7 discharge is to rebuild your credit history. To do this takes tine buy one of the quickest ways is to apply for credit cards. The main problem with having a chapter 7 on your credit file is that most mainstream credit card providers will not accept you.
The best way is to apply for a secured credit card. These are different from normal credit cards because you have to provide a deposit which is used as the credit limit for the card. As you have to provide your own cash for the deposit secured cards are easier to be accepted for if you have a poor credit rating.
Establishing and rebuilding your credit history is one of the most influential factors that is considered as part of the credit scoring model.The key thing with the secured card is to use it responsibly as you want to prove to the credit bureaus that you can be trusted. Therefore, pay your monthly bills on time.
Strategies To Increase Your Credit Score
After filing bankruptcy your credit score will take a hammering. Therefore, you will want to increase your credit score as soon as you can. This will take time but the earlier you start the earlier you will have your financial life back on track.
Your score is a very important 3 digit number that is used by the collection bureaus to determine your credit risk or your ability to repay the credit you want to borrow. When you apply for any kind of credit whether it be a personal loan, credit card or mortgage the lender will need to assess your suitability for that particular financial product.
They can do this by checking your credit report which contains information relating to your credit history, the types of credit you use and if you have any outstanding credit card debt, defaults or foreclosures against your name. With this information they can predict quite accurately how you will spend your money in the future.
This financial information is also used to calculate your credit score which grades you on your ability to manage your finances. Your score is measured on the credit score scale and the higher up the scale your score lies the better. A high credit score means lower interest rates and lower monthly payments. A low credit score means the opposite.
A new life after bankruptcy 7 can begin by improving your financial situation. This can be undertaken by yourself however, if you need help you may want to consider credit counseling. Alternatively, when you filed your bankruptcy case you may have appointed a bankruptcy lawyer as they maybe able to provide you with legal advice regarding the protection of your assets and tax relief.
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