What To Do After Bankruptcy?
If you have done a bit of reading on bankruptcy, then you will know that it can remove your debts, but it can be really harmful to your credit. You also know that bankruptcy will stay on your credit report for 7 years, and it is during these years that you are seen as being a credit risk, if you do not do anything to start reestablishing your creditworthiness. When you are a credit risk, you will not be able to get new loans or other types of credit with competitive interest rates. In order to handle potential losses from those who have bad credit, most lenders will charge very high interest rates to those who have filed for bankruptcy.
You cannot keep creditors from knowing that you are bankrupt as long as that bankruptcy is on your credit report. If you take certain steps to make sure that your credit is rebuilt, then it will creditors more reason to be more inclined to lend you money before the bankruptcy comes off of your credit report. Below are some ways that can help you to rebuild and manage your money much better before you had filed for bankruptcy, which will reduce your chances from having to find another debt solution or to file for bankruptcy again.
Stick to a Budget
When you fail to live on a budget, it can cause you to go into bankruptcy. Living within your means is something that we all need to do in order to keep out of debt and having to get financial help again. Before you have your bankruptcy discharged, you will have to take financial literacy courses which will teach you how to build and manage a budget of your spending that will allow you to live comfortably in your means. Be sure to pay attention to any credit counseling that you receive.
Pay Bills on Time
A lot of utilities and even companies will report late payments to major credit bureaus, and this can damage your credit. When you pay your bills on time, it shows that you can have positive credit history.
Have a Secured Credit Card
Once you have a bankruptcy, you will find it hard to get a regular credit card that is not secured by assets like savings accounts. However, some banks will provide you with a secured credit card, even if you are in bankruptcy. An asset will back up a secured credit card and the limit is often tied to the value of it. For instance, you can put $600 in the bank and the bank will give you a secured credit card with a credit line of $600. Using this card is reported to credit bureaus and you will need to make payments on time and the creditors will see that you can be responsible with money and this helps them to be more inclined to loan money.
Save Your Money
A great credit counseling program will tell you to create an emergency fun and try to save up as much money as possible in a savings account. Once you are bankrupt, having a decent balance in your savings account is much more important because you may not be able to afford repairs and needed items on credit until you have reestablished your creditworthiness. You can also use some of your savings to get a personal loan or secured credit card.
Get a Small Register Retirement Savings Plan Loan
Another way to get back to good standing creditworthiness repay a loan very quickly after you have filed for bankruptcy. Even though you are not going to be able to qualify for many loans, some banks will allow you to borrow money for a RRSP or registered retirement savings plan. In order to do this, you will need to have $1000 and then deposit into your RRSP account. You will then need to get a $1000 loan for your RRSP and then deposit it into the account, which gives you $2000 for retirement. A contribution like that will provide hundreds in tax savings which you can use to pay on your RRSP loan. This is seen as a positive for your credit report and it also helps you to grow a nest egg for the future.
Avoid Bankruptcy by Avoiding Trouble
It is always better to avoid bankruptcy and all of the hassle of rebuilding your credit. There are many debt reliefs options that you should think about before you resort to bankruptcy. Just fill out the debt relief form below to find out what option may be best for you.