Part 1 – Before you Reestablish Credit
For many, bankruptcy is seen as a new lease on life–a fresh start. If you find yourself in the situation of having to file, there are so many worries about the future. What about your credit report? How do you rebuild? How can you be active in your financial future? The key is to start rebuilding as soon as possible.
In both a Chapter 7 and 13 bankruptcies, you can start rebuilding your credit right after the debt is discharged. However, there is a very different wait period depending on which chapter you file under. You normally receive a discharge in a Chapter 7 about 90 days after you attend your 341 meeting. If you have an asset case, it could take longer. In a Chapter 13, you have to wait until the 3 or 5 year period is over and the debt is discharged. You can start before then, but only with the approval of the Bankruptcy Court.
Your first step after discharge is to order your credit report. Many attorneys will pull your credit report before you file to make sure that all your creditors are included in the bankruptcy. It is always good to have a copy of this. You will however want a new copy after the debts are discharged.
You can get your once a year free credit report from annualcreditreport.com. Why? In order to rebuild GOOD credit, you will want to make sure that everything is accurate. In a Chapter 7, the bankruptcy will remain on your credit report for 10 year after your file date. In a Chapter 13, it will remain for 7 years after the file date. You want to make sure that everything you included in the bankruptcy is listed as such. If there are any incorrect entries, you will want to call the companies with your bankruptcy number and get it corrected.
A clear report is not the only thing you can do to play an active role in getting your life back on track. Establishing an affordable budget that does not rely on credit cards is important. This can be hard at times especially with limited income and a larger household. Take a look at your monthly expenses; are all your expenses necessary? Are there some places where you could cut back? Maybe you don’t need cable, internet, or other non-essential bills. You don’t have to cut out all things that are entertainment based but cutting back may help you to save.
Separate your bills into the necessary ones and those that can be cut back on or eliminated. Discuss with your family the possibility of cutting back on certain luxuries until you are back on track. You’ll be surprised at what you can do without!
To Be Continued….
Lam Law Firm, LLC •1335 44th Ave North • Suite 100 • Myrtle Beach, SC 29577
DISCLAIMER: The information contained on this page is for general information, only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult one of our attorneys to see how the law applies to your particular situation.