Life After Bankruptcy
Before filing for Massachusetts bankruptcy, our clients usually want to know what it will be like for them once the bankruptcy is completed and the debts have been discharged. You may have some of these questions right now, as you consider the process. Will I be able to get credit cards? Will I be able to rent an apartment? Can I get a car? Will everyone know that I filed bankruptcy?
Before our clients file a bankruptcy petition, we advise our clients of their rights. The bankruptcy statute is designed to protect consumers, clients, from creditors and to give them a “fresh start” in their financial life. Although bankruptcy is a part of public record, it is highly unlikely that, aside from creditors, anyone you know would find out that you filed unless they specifically searched public records for your name.
And despite what you may hear from the media and creditors, the “fresh start” our clients get really does work: you will be able to reestablish credit so you can finance homes, motor vehicles and get new credit cards. The following are proven ways to rebuild your credit:
- Open a bank account and make regular deposits.
- Apply for a debit card with your bank and use them responsibly.
- Apply for or more credit cards and use them responsibly.
- Pay all bills on time.
- If you need a loan, get a responsible co-signer.
- Be careful where you seek credit, as some creditors will overcharge.
- Avoid “payday loans.”
- Write to credit reporting agencies explaining your situation, especially when it improves following bankruptcy.
- Live within your means: this is the most important lesson following bankruptcy. Our clients tell us that after their fresh start, they really learned this lesson and are much more successful with this strategy.
Your credit score can be improved by following the suggestions outlined above. Although credit scores can seem mysterious, there really is a simple formula behind that number The credit scores from FICO http://www.myfico.com/crediteducation/articles/ (Fair Isaac Company) are weighted as follows:
35% your payment history; payments on credit card, retail card, car and other loans, mortgages; this portion of the scoring also includes adverse information such as bankruptcy, judgments, cases in collection; the factors that they use include the quantity of debts, the severity of delinquencies and the number of up to date accounts.
30% the amount you owe; this includes the mount owing on all accounts and the percentage owing verses the amount of credit that has been extended; proportion of credit lines used
15% the length of credit history; this includes the time since accounts were opened and the time since the latest activity.
10% new credit; the number of new accounts and inquiries (by landlords, creditors etc.)
10% types of credit used; FICO has a formula that factors in the way you use credit including the proportion of credit cards verses car loans verses mortgages.
Hire an Experienced Bankruptcy Attorney So Your Bankruptcy Will Give You A Fresh Start
Life after bankruptcy begins with bankruptcy. To be sure that you listed all your assets, claimed all your exemptions, and get the “fresh start” the law allows, hire an experienced bankruptcy lawyer. The initial consultation is free.