This is a simple guide for rebuilding your credit after a bankruptcy discharge. Recovering from the effects of bankruptcy takes time and attention. This guide suggests a basic 24 month timeline for rebuilding credit.
T minus One
Before your bankruptcy case is discharged, be sure to review your bankruptcy schedules and consider how your financial situation may have changed. It is very important to understand how your finances will be impacted by bankruptcy court’s discharge order. Some questions to ask are:
1.Which debts are discharged?
2.Are any other debtors impacted by this discharge (such as friends or family)?
3.Which debts are not discharged?
4.Do any liens survive the discharge?
5.Has the bankruptcy court avoided any liens on secured property (or judgment liens)?
6.Have I discharged my personal obligation to pay on a secured debt, but a lien survives?
At this point it is critical to have a clear and complete knowledge of who and how much you owe. Any debts that survive the bankruptcy must be paid on-time.
Immediately after Discharge
Congratulations! Rebuilding your credit begins now.
Collect all your bankruptcy paperwork, including a complete copy of your bankruptcy petition, schedules, and discharge order, and put these documents in a safe place.
Sign up for a three bureau credit monitoring service. You don’t want any surprises popping up on your credit.
Obtain a copy of your credit report from each of the main credit reporting bureaus: Transunion, Experian, and Equifax. One free report from each of these bureaus is available every twelve months from http://www.annualcreditreport.com.
Review each credit report and identify every debt that was discharged by your bankruptcy case. Each of these debts should be noted as:
Zero Balance;
Included in Bankruptcy; and
Current
It may be necessary to file a dispute with the credit bureau to ensure that the discharged debts are reported accurately. The credit bureaus are obligated to report back to you within thirty days and send a new, updated copy of your credit report.
Apply for a secured credit card that will “graduate” to an unsecured card within 12 months. Note that not all secured cards graduate. Secure this card with a minimum deposit of $500. Charge on this card monthly, but no more than $100 on this card, ever. Pay this card off completely every month as soon as you get the bill.
Go to your nearest credit union and open a new bank account. You may want to consider direct deposit and automatic bill pay options.
Open a one year / $1,000 secured loan at the credit union. The bank will place your $1,000 into an interest bearing account. Make your payment every month on-time.
More to come in the next post.
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.