You may be wondering how to start rebuilding credit after bankruptcy, especially if you live in Watertown, NY. Life after Chapter 13 can feel uncertain, but there are steps that you can take to guarantee a more secure financial future.
At Grady BK, PLLC, our goal is to assist our clients as they navigate the process of filing for bankruptcy, as well as addressing post-bankruptcy financial planning. We understand how overwhelming and stressful this process can feel, which is why we approach each of our clients as if they were our only client. We provide an empathetic approach that allows us to better understand your individual financial needs and goals. In this article, we will be discussing how to start rebuilding credit after bankruptcy so that you can achieve better financial health.
Steps to Rebuilding Financial Health After Bankruptcy
Rebuilding credit after bankruptcy is a process that requires you to get a firm handle on your finances. You shouldn’t expect to see any positive changes for at least 6 months. It usually takes up to 1-2 years to fully rebuild your credit after a bankruptcy.
A Watertown bankruptcy attorney can help you create a financial strategy that you can put into action after filing for bankruptcy. Having an experienced attorney on your side can help you proceed with confidence as you navigate rebuilding your finances. Remember, bankruptcy is not as devastating as people may think, you will be able to financially recover and achieve true financial health with the right steps.
- Budgeting: One of the very first things you need to do to rebuild financial health after bankruptcy is to create a budget. Your budget needs to reflect all of your bills, your Chapter 13 payments, and any other responsibilities you may have.
- Emergency savings: Some people who are otherwise financially stable may find themselves in a significant amount of debt simply because they don’t have emergency savings. One emergency can completely devastate your finances, which is why you need to focus on an emergency savings fund so that you aren’t relying on credit cards or loans.
- Credit report: Before focusing on improving your credit score, you need to review your credit report. It is very common for credit reports to have errors, and you need to make sure it is correct and isn’t making your financial situation look worse than it actually is.
Improving Your Credit Score
Now that you know what to do with your finances after bankruptcy, how do you improve credit after Chapter 13 bankruptcy? If you are diligent and do a few things consistently, you will start to see steady improvement over time.
Secured Credit Cards and Responsible Borrowing
If you want to take action and rebuild credit after Chapter 13, there are two ways you can go about doing this: using secured credit cards and borrowing responsibly. Secured credit cards work a bit differently from normal credit cards, ensuring you do not build up credit card debt or start to accumulate interest.
Additionally, you can borrow responsibly by applying for small loans that you can pay off as a way of establishing better credit. Keep in mind that any type of borrowing may need prior approval from the chapter 13 trustee.
You also need to be very vigilant of predatory lenders and high interest debt that could easily get out of hand and lead to more financial issues.
Paying Bills on Time
The easiest way to build your credit score back up is to simply pay your bills on time. Make sure you have created a budget that allows you to pay all of your bills in full and on time without relying on credit. When you have filed for Chapter 13 bankruptcy, this is usually much more realistic since you will be given a repayment plan according to your income.
It can also be helpful to evaluate your monthly bills to see if there are any that could be removed or reduced. For instance, you may be able to get rid of monthly subscriptions or go with a cheaper company for things like utilities or power.
FAQ Section
How long will it take to improve my credit score?
Most people can expect to see their credit score improving within 12 to 18 months after declaring bankruptcy. You may be able to see an improvement in as little as one year if you use these financial tips.
Can I get a mortgage after Chapter 13?
While it is possible to get a mortgage after filing for Chapter 13 bankruptcy, you won’t be able to do this immediately. Most people have to wait 2 years. This wait time will be impacted by the type of mortgage and your Chapter 13 repayment plan.
Should I take out loans after bankruptcy?
It is generally recommended to wait at least a few months after bankruptcy to take out any loans. And when you do take out loans, you need to take out small ones for the purpose of improving your credit, not because you want to buy something.
Watertown’s Top Compassionate Bankruptcy Attorney
Do you want to improve your credit after Chapter 13? At Grady BK, PLLC, we can help you navigate your financial situation after Chapter 13 bankruptcy. Having a Watertown, New York attorney on your side can help you proceed with confidence, especially if you are getting ready to start filing for bankruptcy.
At Grady BK, PLLC, we will provide a personalized approach to meet all of your bankruptcy and financial needs. We can help you with every step of the process from choosing a bankruptcy option to filing for bankruptcy to rebuilding your credit.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney in Watertown. Our team at Grady BK, PLLC, is here to provide you with the legal assistance you need as you navigate life post-bankruptcy.
