If you filed for bankruptcy in the past year, you are probably anticipating a severe hit to your credit. The truth is, you are going to suffer that hit. But you do not have to suffer from a poor credit rating for the rest of your life. Being successful requires dynamism, and for individuals moving past bankruptcy cases, that means taking steps to actively rebuild their credit as soon as they can.
Below are four steps you can take to start rebuilding your credit after you file for bankruptcy. Discuss them with your bankruptcy lawyer beforehand to ensure that you make choices within your financial means and do not fall prey to the habits that initially put you into debt.
Get Another Credit Card
Although it might seem counter-intuitive, you should get another credit card after you complete the bankruptcy process. This is one of the best ways to build credit.
Any credit card, even a secured card, will do. What is important is that you demonstrate financial responsibility by making charges and paying them off each month.
Budget, Budget, Budget
Create a realistic personal budget and find ways to force yourself to stick to it. Many people use apps like mint.com to track their spending. Another might be to schedule account payments and necessary purchases ahead of time. The goal is to always have money available to make your required payments in full. This might require you to make certain sacrifices, like moving to a cheaper apartment, downgrading your vehicle, or spending nights and weekends at home rather than out.
Do Not Close Your Accounts
Again, it might seem like closing credit card accounts is the best way to help yourself avoid accruing new debt after bankruptcy. But closing accounts, particularly accounts with high credit limits, can hurt your credit score. Instead of closing your accounts, keep them open and pay down their available balances. If you do not trust yourself not to make charges to those accounts, put your credit card in a locked drawer or use it for only one specific purpose, like buying gas or groceries and do not deviate from this purpose.
Vet Financial Counselors Very Carefully
A quick online search will turn up many individuals and companies offering financial counseling. You will be required to complete a financial counseling course to complete the bankruptcy process, but you might want further financial education and seek it out on your own later. Be very careful when choosing the right financial counselor because many of these companies are scams. Choose a financial counselor who is certified by the Association for Financial Counseling & Planning Education.
Work with an Experienced La Crosse Bankruptcy Lawyer
If you had to file for bankruptcy in the recent past, do not feel like you have experienced a personal failure or that you cannot have good credit again. You certainly can rebuild your credit and enjoy a financially responsible future. To learn more, contact our team of experienced bankruptcy lawyers at Moen Sheehan Meyer, Ltd. to set up your initial consultation in our office.