Follow These Tips to Bounce Back from a Bankruptcy Filing
Thanks to consumer bankruptcy, honest yet unfortunate debtors get a fresh start. Some people squander that fresh start. Continued poor financial habits, like overspending and failure to save any money, usually cause former debtors to anxiously watch the calendar until the waiting period expires, so they can file bankruptcy again. Consumers who follow these tips, however, usually put bankruptcy in their rear-view mirrors.
A good Chicago bankruptcy lawyer does more than give families a fresh start. Lawyers help people maximize their fresh starts. Most businesses are built on referrals and repeat business. We want you to refer us to other people you know who have serious debt problems. However, and don’t take this the wrong way, we don’t want your repeat business. In fact, we hope former debtors never speak to another Chicago bankruptcy lawyer, in our firm or elsewhere.
Have an Explanation Ready
Most people like good surprises and hate bad surprises. To a loan officer, a prior bankruptcy filing is about the worst surprise possible. This nasty revelation quickly changes an attitude of “how can I loan this person money” to an attitude of “how can I get rid of this person.”
Therefore, always tell loan officers or credit officers about your prior bankruptcy filing before they pull a credit report. Usually, if you have a reasonable explanation, like a divorce or job loss, they’ll understand.
Don’t get your hopes up too high. Former bankruptcy debtors have fewer purchase options and pay higher interest rates. There’s no way to sugarcoat these things.
Furthermore, many creditors refuse to work with former bankruptcy debtors. Don’t take that refusal personally. Just go somewhere else and be grateful you didn’t waste an hour waiting for the loan officer to bring you bad news.
Stay Current on Monthly Bills
Paying monthly bills on time, especially mortgage payments, car payments, credit card payments, and other reported bills, gradually ups your credit score. Later payments quickly deflate it.
Late payments on non-reported items, like medical bills, indirectly adversely affect your credit score. A collection referral or charge-off is almost as bad as a repossession or a bankruptcy filing.
On a related note, people who make thirteen payments a year instead of twelve quickly build up financial reserves. If they apply part of the extra money to prepaid interest, they also develop goodwill with the lender. These two things often enable debtors to weather the next financial storm they encounter.
Use Credit Responsibly
Your credit score measures your ability to responsibly use credit, not your ability to pay cash for everything. Therefore, responsible credit use raises a score even faster than paying bills on time.
We mentioned post-bankruptcy credit cards above. To take full advantage of this effect, get a secured credit card, charge something every month, and pay the bill on time every month. Usually after five or six on-time payments, the cardholder is eligible for a larger credit limit or even an unsecured card.
Other people buy furniture or other such items on credit. The initial interest rate may be alarmingly high. But once again, after a few on-time payments, the lender often reduces the interest rate or the debtor can refinance the loan.
Work With a Dedicated Cook County Lawyer
No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. The sooner you reach out to us, the sooner we start working for you.
