Five Tips For Recovering From An Illinois Bankruptcy
Bankruptcy filings are down overall, but not in Chicago. In 2015, the Northern District of Illinois was the busiest bankruptcy district in the country. Many of these people filed bankruptcy to take advantage of the automatic stay. Section 362 of the Bankruptcy Code stops almost all creditor harassment, including repossession and foreclosure. Others sought out federal debt relief for the extended protected repayment period.
Regardless of why they filed, all these debtors must rebuild their credit following Chapter 13. That may seem like a tall order. But it is not that daunting of a task, as long as debtors adhere to a few key principles.
Reassess Old Habits
In most cases, the primary reason for a bankruptcy filing is beyond the debtor’s control. Things like high medical bills and divorce can happen at any time with little or no warning. Most people lack the financial means to effectively weather these storms.
Nevertheless, poor financial decisions often play a part in an Illinois bankruptcy. Most people lose many of their credit cards after bankruptcy, and that is usually a blessing in disguise. If overspending was a problem, consider ditching the debit card and always shopping with cash. That includes things like trips to the grocery store.
Get a Credit Card
Although they do create temptations for overspending, credit cards are not necessarily bad things. In fact, borrowing money and repaying it on time is one of the best ways to rebuild a credit score.
It’s usually easier to qualify for secured cards. If possible, try to find a card that does not include a “secured” notation on your credit report. Everyone agrees that it is a good idea to put something on the card every month. Opinions vary as to the payment method. Some say it’s better to pay off the balance in full every month. Others say it is better to leave a small balance so the bank earns interest.
Stay Current on Secured Debts
This suggestion may belong at the top of the list. Paying certain bills on time constitutes the majority of your credit score. Bear in mind that not all bills get reported to the credit bureaus. The ones that do include:
- – Home mortgage,
- – Auto loan, and
- – HELOC (Home Equity Line Of Credit) payments.
Because you successfully completed Chapter 13, you have a zero past-due balance on accounts like these. Do whatever it takes to keep it that way. It may be a good idea to make thirteen payments a year instead of twelve. The extra money gives you a cushion and also reduces the amount of interest that you pay.
Embrace the New Normal
Many times, to make the debt consolidation payments in an Illinois Chapter 13, the debtors gave up many luxuries. If possible, try to maintain these spending habits going forward,
Be Upfront
When you do something like apply for a loan or shop for a car, tell the lender about your prior bankruptcy before the lender runs your credit report. No one likes surprises. If a sufficient amount of time has passed, perhaps a year or so, you have a reasonable explanation for the filing, and your credit history has been spotless since your discharge, you will probably still get the loan.
Team Up With Experienced Lawyers
Recovering from Chapter 13 is probably easier than you think. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in both Indiana and Illinois.
Resource:
propublica.org/article/chicagos-bankruptcy-boom
