You’ve Gone Through Bankruptcy

What Now?

First, take a breath, for a little while, have a cup of cocoa and relax, however, I don’t recommend the ketchup nor the Tobasco.

Afterwards, there’s plenty to do.

Bankruptcy is to credit repair as spiders are to a good nights’ sleep. Bankruptcy is the Credit Reaper. Nevertheless, sometimes bankruptcy is all you can do. You have to be able to pay for rent or mortgage, feed the family put tires on the car and gas in the tank. How can you do that if your wages are being garnished or you find your bank account empty one Saturday morning when you know your check was deposited yesterday?

If you need a bankruptcy, call I can help. Call 9512003613.

On the other hand, two of the easiest things to do to repair your credit or rehabilitate your credit, is to open a secured credit card and/or buy a car.

Don’t buy the car unless you absolutely must and there is no reasonable alternative. If you have to buy a car, the interest rate will be ridiculous. So, if you have the ability to borrow from a relative, or if you have been able to save  since your bankruptcy, or if you can take a small 401k loan to buy a reasonable car, go ahead. Make it reasonable, you don’t need a lot of options, so skip the bells and whistles. Get an AM/FM radio and air conditioning that both work. Stop there because the lower your car payment, the better your credit will be. If you want to buy a house down the road, avoid buying the car on credit if you can.

The next thing that is easy to do, in general, is to get a secured credit card. You go to your bank or a bank and bring in say $500 cash and ask for one. Usually if you’re paying the amount of the credit line you want down, they’ll do a credit-check light, or in other words they might not even do one. At my bank, because I was already banking there, they only checked their own records. I gave them $1000 in cash, and they gave me a card with a $1000 credit line with very few questions. The interest rate will be horrible but keep reading and you’ll see that it doesn’t much matter if you do as outlined below.

So do you buy something and pay it off? No. You can of course and that will help, but is actually not the best strategy when trying to improve your overall credit health. So you now have a credit card with a $500 credit line, what do you do? Save up another $500 first. Then find something you need to buy for $500, such as a new computer or a TV or something. Then don’t pay it all off at once. You’ve got the money saved, so you pay it off 1/3rd at a time.

By doing it 1/3rd at a time, the credit card company will like you. You’ve paid it off quickly so you’re a good risk. But you also had to pay some interest, and that makes you a great risk. Pay it off too fast, means no profit for the credit card company. Pay it off too slow and that means high profits for the credit card company but also high risk and that is not so good for them. They want want profit and high performing contracts in their portfolio because that has a positive impact on the stock price.

In a year, not only will you get your deposit back but they’ll double your credit line or more. And that increase in credit-line is the most important thing that happens to your credit rating. It can’t happen unless your payments are in good standing, so yes those are important too. But you need both to have good credit, exceptional credit means you have good standing in your payment histories, but also high credit lines and low balances.

Note that I said histories. So you want more than one account open and in good standing for at least twelve (12) months after your bankruptcy is over, or in a chapter 13, twelve months after your confirmation of your chapter 13 payment plan. After the Great Recession, many couples each got a secured card and then put each other on each other’s cards. Then each had two (2) cards.

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