Credit repair after bankruptcy

How does your credit look after bankruptcy?

After getting your bankruptcy discharge you need to prepare to tackle the task of making sure that credit entries in your credit report are not still showing delinquent accounts. Anything that should have been included in bankruptcy needs to be labeled as such. About 3 months after your bankruptcy discharge you need to take a close look at your credit report and fix any erroneous entries. These can cause trouble for you down the road qualifying for credit, loans, jobs etc.

You’ll be able to get your credit report from all three credit bureaus by visiting Annual Credit Report, everyone is entitled to a free credit report per year. When you get your report you are very likely to find accounts that have not been cleared after filing bankruptcy. It’s common for creditors not to bother to make these updates especially since they’re not getting paid, they’re certainly not interested in doing any favors. However, you must correct these errors yourself.

Repairing your credit report after filing bankruptcy

Ideally you’d want to wait from 3 to 6 months to get your credit reports and start spotting anything that should have been included in bankruptcy. If you find that accounts that should now be closed are still open and delinquent, then what you need to do is make a copy of your bankruptcy schedules and discharge documents and start a dispute with the credit reporting agencies (Transunion, Equifax and Experian). Your discharge papers are the key to get this resolved. This can also take sometime since the verification process is slow.

Hiring credit repair services will work better for anybody, it’s definitely a good option, just be ready to provide your bankruptcy documentation. Credit repair agencies are more effective at doing this, however you must take care to hire only a legitimate credit agency for this industry is filled with scams.

Bounce right back after bankruptcy

Repairing your credit is only one aspect of getting your financial life back on track. You have to now work a little harder to convince creditors that you’re still worthy of getting credit. Even after you get your credit entries corrected, you should know that your bankruptcy file will remain on your credit report for up to 10 years, however that big dark cloud can being to dissolve with positive credit entries that you should be striving to achieve.

There are several ways to regain control of your credit after filing bankruptcy, depending on what you want to accomplish, be it a mortgage, auto loan or a credit card. Your credit report must accurately report your financial history for you to begin rebuilding. Once you do that there many programs that offer bankruptcy credit cards, personal loans and mortgage loans after bankruptcy. Read the post on Getting a mortgage after bankruptcy for more info.

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Can I get a mortgage after bankruptcy?

Buying a home after bankruptcy

This is more of a myth than most people realize, the fact is that it is definitely possible to get a mortgage loan after bankruptcy. Sure, getting to a stage in which lenders will consider you again is still a bit tough, but generally the belief is that since personal bankruptcy stays on your record for up to 10 years you have to wait that long to get a mortgage loan or consumer credit again. It’s not that way at all. Credit after bankruptcy is possible when you take back control of your personal finances by implementing rigorous changes for repairing and bringing your credit to a healthy state again after bankruptcy.

Getting the necessary credit for buying a home after bankruptcy just requires you to know how. It’s true that filing bankruptcy deals a devastating blow on your personal credit, but the effects of bankruptcy can be overcome with an aggressive campaign on your part for rebuilding your credit properly and legally. When you apply for a mortgage after bankruptcy, you need to make sure your lender has in front of them a solid record of consecutive positive entries in your credit report. This should include a reference from your current landlord and rental receipts that prove that you made your monthly rent payments on time for at least a year.

Cleaning up your credit report after bankruptcy

This is not an invitation to hire a credit repair agency and attempt to delete your bankruptcy record from your credit report. Remember that you only have the right to dispute true inaccuracies in your credit report, if all else is accurate disputing them with the help of an agency may prove expensive and ultimately useless.

If you really want to qualify for a mortgage loan after bankruptcy, it’s imperative that you clean up your credit report. Meaning that you need to get copies of your credit report from the three credit bureaus and study them side by side making sure that accounts that were discharged in bankruptcy are not still labeled “defaulted” “open” or “overdue”, even if your creditors are not collecting from you, these are the red flags that will keep you from getting a mortgage loan. If this is the case for you, start by using the dispute systems from the three credit bureaus. You should also have copies of your personal bankruptcy discharge papers ready to send to the bureaus if they require them.

Another good way to being ranging high enough for a mortgage after filing bankruptcy is to get a bankruptcy credit card or a secured credit card. You’re going to need two types of payment history to successfully rebuild your credit and they are “installment credit” and “revolving credit”. When you show installment accounts in your credit history these will include current mortgage loans, auto loans, student loans etc. Revolving credit is typically unsecured credit, however qualifying for unsecured credit after bankruptcy is a bit tough, so a secured credit can be a great option. With a secured credit card you will only be able to spend up to the credit limit set by the amount you deposit in the credit card account. So it’s a prepaid credit card basically and it may seem like a burden to send money to a credit card company so you can spend it later, but it’s an important step in qualifying for a mortgage loan again after filing bankruptcy.

Other tips for getting a mortgage loan after bankruptcy

As mentioned above, you would want to show installment accounts on your credit report, this will server as a great reference and increase your chances of becoming a better prospect to mortgage lenders. However, car payments and the interest rates attached to car loans are typically high if you’ve been bankrupt. You have to realize that in order to qualify a mortgage after bankruptcy, your debt to income ratio will be the deciding factor. The lender has to make sure that you have the needed income to make your monthly mortgage payments again and then some. So resist the urge to buy a new car and ignore the recommendations from auto loan companies that this is a good way to rebuild your credit. It is only if you have enough income to cover a mortgage loan after the fact, that you should consider financing an auto purchase.

Pay your monthly bills on time. You can not afford any more glitches or blemishes on your credit report. Being able to get credit after bankruptcy is all about continuous positive entries in your credit report and nothing else. This applies not only to your consumer debt accounts but your rent, utilities, and any other obligations you have. Mortgage lenders will be more inclined to dig a little deeper if you have filed bankruptcy and are trying to qualify for a mortgage again, so show a good trail of positive credit entries and life after bankruptcy will simply get easier as you begin to regain the trust of lenders again.

If you have been paying your bills on time and are ready to apply for a mortgage loan again, another reference that can give you some leverage in qualifying for that loan is to have a letter of credit from the non-traditional credit companies such as your utilities companies, hence the reason why you must always make these payments on time as well. You can include your cell phone company, your electrical and cable companies, it’s as simple as contacting them for a letter of credit and as long as you have a positive record with them, it should not be a problem.

Finally, you may also be required to give a larger down payment on your new home before you can qualify for the mortgage loan, this can be an obstacle if you don’t have 20 to 30 thousand worth of liquidity to finance your purchase. You may be give the advice to borrow the money from you 401k, IRA or other retirement account, which is not uncommon for buyers who want a mortgage loan after bankruptcy, but it’s a decision that you should consider carefully, since you may have to pay back the money you borrow from your retirement account, otherwise you’d have to cash it all out and pay the tax and penalties as well.

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Should you take a free bankruptcy evaluation?

As the economy continues to be the main cause of concern for most Americans, people are starting to consider bankruptcy as way to find relief from their overwhelming debts. The real estate crash and the high price of fuel are only part of the reason, while credit card and other unsecured debts have contributed heavily to the current burden of debt many people live with today and have a tough time keeping up with. So it begs the question, should you take advantage of a free bankruptcy evaluation?

If you’re in financial stress, there are several reason why you should consider taking a free evaluation with a bankruptcy attorney, and one of the most important ones is that you need to accurately find out right now where you stand financially. A bankruptcy consultation can clear a lot of doubts about the process. It is during this initial consultation that your attorney can run the bankruptcy means test for you, this is the determining factor in whether first of all you qualify to file for bankruptcy or not, once that’s determined further calculations of the means test can specifically tell you which bankruptcy chapter you’re eligible for.

Other things that can be revealed and may surprise you to find out during this consultation is that there are certain debts that can not be discharged under any bankruptcy chapter. These include tax arrears, child support payments, judgments against you and student loans to name a few. This is a very important reason to consult with a professional bankruptcy attorney, since most people can not make this determination on their own. If your case consists of mostly these kinds of debts then it’s possible that bankruptcy protection is not possible for you, instead you may consider debt consolidation under a different type of service.

Filing chapter 7 vs chapter 13

If have you considered bankruptcy but are not familiar with how it really works, you may be under the impression that by filing bankruptcy you’ll end all your financial troubles. Again, this is the reason why a bankruptcy evaluation with an experienced attorney is necessary. As mentioned above, during your evaluation you will find out which chapter best suits you after your attorney runs the means test on your case. This will depend on whether the bulk of your debt is secured or unsecured debt and whether you have the necessary disposable income.

There are very significant differences between chapter 7 vs chapter 13 bankruptcy, mostly in that in chapter 7 bankruptcy you get to discharge your unsecured debts and in chapter 13 you simply rearrange your debts into more manageable terms of repayment. Under chapter 13 your debts can be reduced and as long as the bankruptcy court and trustee accept your new terms of repayment then you will get a discharge once the debts are paid off.

All of this information will be better explained by a bankruptcy attorney in your area, you do not need to struggle with learning the bankruptcy code and attempting to apply the laws to your case on your own. Even if you do not end up filing with the help of a bankruptcy firm, you will get a lot of insight into the process by taking advantage of a free bankruptcy evaluation. Many law firms offer free evaluations and one on one consultations so take the time to find a reputable firm and bring your case to be evaluated you’ll gain a wealth of knowledge in the process.

To take advantage of a free bankruptcy evaluation now, visit legal helpers and fill out a simple online evaluation form, you’ll then be contacted by a bankruptcy attorney in your area to get your process under way. Visit our review page for legal helpers.

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Credit repair, go it alone or hire an agency?

If you have any experience as a consumer, you know that your social security number equals a credit report that has entries reflecting your financial habits and overall worthiness as a responsible consumer. You should understand by now that credit bureaus and creditors are not infallible, they can make mistakes on your credit report unknowingly, and unfortunately, it is you who must catch these inaccuracies and fix them.

Credit Scores - the warm and fuzzy creditors love.

Credit reports are more than just a list of accounts with their payment history, yes it’s true that creditors love to see lots of green tabs and positive check marks on your credit history. But lately, one of the most important factors and probably the deciding factor in whether you get credit approval or not is your credit score.

This three digit number speaks volumes to anyone researching your financial life. It’s no surprise that so much emphasis has been placed on credit scores in the last few years since that’s the first impression creditors get from you. Consumers have also gotten more apt to actively manipulate their scores by doing certain things that can legally raise their scores. From making larger monthly payments, to paying in full and then borrowing again, to fixing inaccuracies in their credit reports either alone or by hiring a credit repair agency.

What to do about credit inaccuracies.

Many people today are living with credit inaccuracies and outdated information, mostly for lack of knowledge on what to do about them or simply because they don’t even know they’re there. These entries vary from late payments that were never late, to closed accounts that still show as open, to defaulted accounts that should be included in bankruptcy, etc

The Fair Credit Reporting Act established for consumers the right to dispute credit entries for free, however the process is often lengthy and complicated so handling it on your own is definitely the hard way of doing it and although you can save you money this way it can’t guarantee results.

Hiring a credit repair agency would be a better approach, BUT! Proceed with caution. What does that mean? Well, you can’t erase accurate entries from your credit report nor can any credit repair agency. No one has these magical powers or special ways of doing this. I mention this because there are in deed a lot of scams in the field of credit repair, so many in fact that it’s really hard to tell anymore if an agency is legit or not.

If you have true inaccuracies and outdated information that needs to be fixed then by all means begin by consulting a credit repair agency and get a good feel for how they work and what it is exactly that they intend to do for you.

Finding reputable credit repair agencies.

Just like you shop for auto insurance or a primary care provider, you should take care of doing the proper screening when looking for a reputable credit repair agency. The Better Business Bureau is not a bad place to start your research and definitely only consider those companies with satisfactory records.

Also it’s important that you know that the Credit Repair Organizations Act establishes that these agencies must follow specific guidelines in order to protect consumers. You should be made aware of these and be given any disclosures before you sign anything. Your contract should have the following information:

• Terms for Services, which should include any limitations and disclosures.
• A detailed description of the services to be performed and their total costs.
• The time it will take to achieve the promised results.
• Any guarantees they are offering you.
• The Agency’s name, Point of contact, business address and website.

Be suspicious of any company that does not have a website, this is a sign that they’re not well established or not established at all and you could be dealing with someone whose intent is to run with your money. On that note here’s a list of tell tale sings that you may be dealing with a professional scammer and not a legitimate credit repair agency:

• The agency representative asks for payment before the services are provided. According to the Credit Repair Organizations Act, this is a violation and more than likely you’re not dealing with someone who adheres by these laws.
• Outrageous promises, like removing all bad entries from your credit report to include your bankruptcy record, any judgments, leans etc. Once again, “no one” has the power or right to do this, if the entries are accurate.
• The agency representative insists that all credit entries are disputable and encourages you to participate in your own dispute by sending letters to the credit bureaus. This is based on the theory that if creditors do not respond within 30 days the entries can be erased. The process of verifying credit entries today is much easier than it was 5 years ago, it does not take 30 days to verify these entries, they can be done within hours of receiving the dispute.
• The agency representative suggests or lays down a plan for you to get a new identity under a new social security number. Should you hear these words come through the phone line, simply hang up immediately and report the agency. You do not want to willingly participate in such procedures, you will be held liable for such actions and prosecuted by the federal government. This is a felony and it is very serious!
• The agency representative makes outrageous claims about their experience and the number of clients they have helped, yet has no way of proving it, or insists on you reading testimonials on their website or pamphlet. Never base your decision on testimonials these are heavily abused and never worth the time reading anyway. The best testimonial you can read is that which the Better Business Bureau provides for its registered companies.

Should you want to consider giving it a go on your own, visit the Federal Trade Commission’s website and at the bottom of that article you’ll find a sample dispute letter that you can tailor to your situation. Keep in mind that this approach will take you more time and effort, but it is most certainly possible to achieve the same results if you truly believe that you have inaccurate entries on your credit report.

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Outlook of the economy creates pessimistic attitude

Across the US home prices have come crashing down, making them affordable again, for anybody looking to buy a home that is. Prices continue falling gradually each month and in the turmoil some people see opportunity knocking, but is this going to cause a new surge in demand? Absolutely not. This is quickly turning into an investor’s market and while this may bring relief to cities and lenders across the US for unloading this surplus of homes, it won’t necessarily bring good to all.

Other financial sectors have been affected by the real estate crash and because the signs are too obvious that we’re in a down fall, for the most part consumers are keeping cautious about overspending.

This pessimistic attitude, which is not at all unjustified, can create a problem for the Fed as it has in the past. When the majority of the population views the economy as a sliding trend to disaster, the feeling can spread quickly across the nation like nerve cells. This forces rate cuts and more attempts to revive the economy by printing billions more of our already devalued green backs.

The federal government’s answer to stimulate the economy by sending out tax rebate checks is one that will prove negative. This is an attempt to raise the spirit and enthusiasm of consumers and get us all back in the habit of spending, but without a solid outlook of an economic turn around, there’s very little chance of this actually working its intent. The stimulus checks will be held on to or used to pay off debt and not much else.

Much of this negative attitude is based on the high prices of energy products like gas and electricity. Gasoline in particular has reached an unseen level and shows no signs of moderating by anyone’s efforts. This takes a major toll in the level of confidence that is expected to be induced by this petty plan of tax rebates.

There are several other metrics in between the real estate market crash and the rising price of oil and energy products that are in full force at debasing this economy. It’s not too far fetched to say that we could be reaching depression like levels of recession. The real estate market is in a sump that it can’t be dug out of for many years to come. The rising prices of fuel and the other ailing elements within this faulty economy are steering us all into this state and no agreeable plans to rescue the economy are yet available.

Stimulus checks? let’s get real.

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How to recover from Bankruptcy

Bankruptcy is going to leave a bad taste in your mouth for years to come, it’s a fact. If you have read the news lately, then you know that bankruptcy courts are working overtime to process the growing numbers of bankruptcy petitions being filed. This may leave you wondering now how to recover from bankruptcy after being discharged. Consumer bankruptcy has its advantages but there is a recovery period and the process maybe slow.

The fact of the matter is that it is now a done deal, you’ve filed for bankruptcy and you’ve been discharged and although that was somewhat of a relief initially, you are now facing a bleak future with your new credit. There are some things you can do for yourself to help you get through this and recover from bankruptcy in a progressive manner.

Reestablish credit with a bankruptcy credit card - It’s not that you can’t get credit anymore, it’s that you don’t qualify for a good rate. Because creditors who will consider your application are in fact taking a chance on you. So they invented programs where you can get a credit card again and this is an important move in recovering your credit. This is often referred to as a bankruptcy credit card, you just have to pay more on your interest rate. Much more sometimes. it’s not unheard of that creditors will charge anywhere from 19% to 29% for these types of programs. So do some digging but always shop around and try your best to get the best deal. Once you do get your new credit card, use it only for necessities and emergencies. Do not take cash advances unless it’s a true emergency and always pay on time. Reestablishing a positive record of credit transactions will begin the recovery process for your credit and soon enough you’ll forget that you filed bankruptcy.

Check your credit history often - This is something that a lot of people overlook, they think that because their credit is ruined they should not bother to check it anymore. You may find that your credit will have more mistakes after filing bankruptcy. Sometimes after bankruptcy some of your debts will remain recorded in default on your credit report, when they should be labeled “included in bankruptcy”, if this is the case then you need to take the necessary steps to fix this, because if the entires remain in default no one will ever lend you a penny. Also collections accounts may appear especially if your debts were sold to collections agencies and then your debts were discharged in bankruptcy. No creditor will ever bother to make sure that your credit is updated correctly and since they won’t be getting paid the last thing they’re going to do for you is a favor. So make sure you use the credit bureaus dispute systems to get these entries corrected. Next, you need to sign up for credit monitoring from one of the three credit bureaus for a fee or sign up for your annualcreditreport.com, for free, which you can only do once a year, but you need to get something.

Be on the alert for shoddy deals - Lenders will access public records to target filers of consumer bankruptcy, this is a well known fact because your bankruptcy file is public record and anyone can access them. They access these records so that they can offer you credit, auto deals, and even home financing. Often they will emphasize that your credit does not matter and they can finance anyone. You MUST be very cautious with these deals. They are geared to making lots of money from desperate people. This is not a good way to start recovering from bankruptcy. Read these terms carefully and ask all the questions you can and if it does not feel right to you then don’t do it. Keep looking and you’ll eventually find a creditor with a better deal, it’s a bit tougher and the choices are limited but you have to realize that you could be getting yourself into more trouble financially than actually helping your cause. Remember that always, these companies would not come after you if they didn’t have something very valuable to gain. They are never acting in your best interest.

Consult with professionals and get support - You don’t have to have a lot of capital to go to a financial planner, they’re there to assist everyone. After your bankruptcy discharge you should be clear of your some debts or repaying them under better terms, you should be on a tight budget and making sure your extra cash is going some place where you can’t touch it. You won’t always have the knowledge to know how to invest your money and you may not always know what kind of budget you should adopt to start making significant improvements, that’s why financial counselors are there. You won’t be able to recover from bankruptcy if you don’t adjust your budget considerably. It’s all about change and it’s all about looking back at where you were before and where you are now and most importantly what you can do to ensure your future brightens up. Consult a professional and ask them to work out a good reasonable budget for you and then stick to it, do not negotiate with yourself and do not compromise. This is how you’ll avoid bankruptcy again.

Think about your future and your family’s future - This also means setting goals, you may have had plans to retire at a certain age. You can still accomplish these things if you continue to work on your attitude about money. Bankruptcy is not the end, it is the beginning of something new. If you continually focus on the future you’ll naturally begin to take action towards accomplishing those things, but it must be a constant effort and your behavior with your money needs to show it. If you do not see yourself advancing in the right direction you can always stop and study your plans again and make the necessary changes. Always stay in touch with your financial counselor and bring up any questions or concerns. You should not be investing aggressively, you should be investing consistently to help you recover from bankruptcy.

Change your attitude and practice discipline - What you did before obviously did not work too well. Maybe you always thought that it was ok to buy things you needed on credit. Maybe you thought it was a good idea to finance your home with a sub-prime loan and pay interest only and maybe you only made the minimum payment on your credit cards. Since none of those things proved to be wise decisions and only lead you bankruptcy, it’s time to change your habits, change your way of rationalizing when it comes to making purchases from now on. There’s a difference between needing and wanting something, but we often make ourselves think that what we want is what we need. You had everything to do with the decision making process in your finances so start with that and change it completely. Bankruptcy protection is over with, if you end up in serious debt again, there will be nothing anyone can do for you.

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The subprime crisis is already here

Back in 2002 when I bought my condo, there were no obvious signs to me that what was going on in the mortgage market were the beginning stages of the current subprime crisis. I knew I was making the right decision to buy a place while I could still afford one and I saw how property values jumped significantly in the next two years. However, all along I had this feeling that this rapid growth of the market could not be normal and that it could not possibly benefit everyone. I also figured that at some point I would have to sell my condo and I would most likely want to sell it at fair market and maybe just a tad more.

Would someone really be willing to pay me double the price of what I paid for it a couple years ago? This really puzzled me, and even though I thought it would be great to make that much money, I couldn’t help to feel a little concerned for whoever ended up buying my condo. Would they finance with sub-prime or conventional loans? How will they manage such a large monthly payment? Will they continue to enjoy the market growth like I did?

It can’t grow forever, what goes up must in deed come down, and that’s what we’re witnessing here. It’s a nose dive of a decline for the housing market and it really is difficult to watch. The same thing goes for the stock market, there’s usually a period of aggressive growth that must eventually fix itself. I trade very moderately in the stock market so I keep up with it, but it’s definitely not a huge worry for me.

Though the housing market, which everyone is part of in one way or another, is now suffering from a subprime mortgage crisis, which in turn has an impact on the overall economic growth. As more mortgages default, there’s less confidence in buying homes, and we’re ending up with a surplus of homes across the country, causing a very dramatic decline in new home construction and prices of homes. All of this builds the downward pressure that weighs on the overall growth.

Interest rates on a number of subprime and ARM loans are due to go up through 2008. However, to the benefit of home owners who may be finding themselves on the brink of bankruptcy, the US treasury, backed by US legislators, is enabling the deferment of interest adjustments in order to begin working towards stimulating the economy and re-establishing confidence in consumers and financial markets.

To begin a resolution to the subprime crisis, one of the measures that can be taken in the future through legislation is to limit the numbers of different financial products that revolve around these types of loans and to force revisiting the metrics to qualify consumers for these types of loans. Salaries will need to keep up with inflation and unemployment needs to stay low. Finally, the housing market’s steady decline needs to be interrupted as soon as possible, but this won’t be possible without more aggressive efforts from the US treasury and the government.

Meanwhile, if you’re finding yourself in the same situation that millions of homeowners are in right now, where you’re not making your mortgage payment and considering bankruptcy. You need to know that there maybe alternatives available to you, banks and mortgage lenders are starting to resort to offering their customers loan modifications and or encouraging a short sale. Read more about loan modifications and other free resources here, it may be just what you need to save your home.

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