It can be an incredibly challenging decision if you are considering bankruptcy as an option to pay your debt in Greene County. It isn’t something you want to take lightly as it will have a significant impact on your credit score, which can have long-term repercussions.
Do you want to know how you can rebuild your credit score after choosing a Chapter 7 bankruptcy? If so, check out this article, where we will be discussing what Chapter 7 bankruptcy is and how to build your credit score after Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Before we discuss how to establish credit after Chapter 7 bankruptcy, you need to understand what this type of bankruptcy entails. It is also called liquidation bankruptcy since you will need to sell possessions and assets so that you can repay your creditors. It is a good option for many situations as it does not require any drawn-out repayment plans, allowing you to clear off most of your debt quickly.
Although this option can help you to clear off debt and start fresh, it is usually a last resort. You will need to be prepared to sell assets and belongings that have value, such as vehicles, property, collectibles, jewelry, etc. Some property that has value may not need to be sold if it is considered exempt property and some people are able to keep all of their property depending on their specific situation.
If you are considering filing for chapter 7 bankruptcy, it is crucial that you hire a bankruptcy attorney who can help you through this process and ensure you get the best result.
Steps to Rebuild Credit
Finding the best ways to raise your credit score after Chapter 7 bankruptcy should be a top priority after you have gone through this process. No matter what type of bankruptcy you go through, this will have a significant impact on your credit score and credit history, which can make it difficult to do certain things in the future. Here are some ways to build credit after Chapter 7 bankruptcy.
Keep Up on Payments
Although Chapter 7 bankruptcy is designed to help you pay off your debt, most people are still left with some debt that they have to continue to keep up. It is crucial that you continue to make these payments so that they will reflect positively on your credit history. For instance, you may have house payments, car payments, student loans, or child support payments that you need to continue making.
Although making monthly payments on your remaining debt is not a quick solution for rebuilding credit after Chapter 7 discharge, it is still an important step. Maintaining your payments and paying on time will help your credit score over time, resulting in a positive credit history of managing your debt responsibly.
Apply For New Credit
After filing for bankruptcy, the last thing many people want to do is resort to more debt. The reality is that taking on debt is one of the only ways you can improve your credit score and credit history. When you apply for new credit, you will get another monthly payment plan that will help you build your credit score after Chapter 7 bankruptcy as you continue to make regular payments on time.
Some safer options you can choose when applying for a new credit include secured credit cards or becoming an authorized user on a credit card. A secured credit card requires you to pay a security deposit before it is issued to you, which is usually the same amount as your credit limit. This is a safer option since that deposit will be used to cover your bill if you ever miss a payment or are late.
Becoming an authorized user for a credit card is also a good option as it adds you on to someone else’s credit card. Not only can you use this credit card, which can improve your credit score, but the primary account holder’s payments will also reflect on your credit history. Keep in mind that you need to be very careful when choosing this option, as your credit score can be negatively impacted if the primary account holder misses a payment or pays it late.
Apply For a Loan
A loan is also one of the best ways to bill credit after filing chapter 7 bankruptcy as it works much like a credit card as you make monthly payments. There are specific credit builder loans that put your deposits into a savings account, which you will later get access to once you have paid off the total loan amount.
Another option is to apply for a loan with the help of a cosigner, which is often necessary if your credit score is too low to get a loan on your own. The cosigner will be equally responsible for paying back the loan amount if you are unable to do so.
Monitor Your Credit History
Before you begin finding ways to build credit after Chapter 7 bankruptcy, you need to know what your credit history is like. You will need to monitor your credit score every few months to check for accuracies or negative marks that may not apply to you. Doing this will also help you to figure out what credit building methods are working and which ones aren’t.
Keep in mind that building credit is a long-term process and isn’t going to show results immediately. Some credit-building methods may even bring down your credit score temporarily before it starts to rise, so don’t be alarmed if it initially starts to go down.
Get in Touch With Richard P. Arthur, Divorce Attorney
Are you ready to start building credit after Chapter 7 bankruptcy? Richard P. Arthur, Attorney at Law, can help you decide if bankruptcy is the right decision for your situation, as well as help you file for bankruptcy. Richard P. Arthur has handled hundreds of bankruptcy cases in Greene County, OH, and can help you understand exactly what this process entails. Contact us today at 937-254-3738 for a consultation.