The elimination of bankruptcy from a credit report
A bankruptcy can stay on your credit report for up to ten years, negatively affecting your score and causing lenders to take a long, hard look at you before extending even the most basic loan. After ten years, however, the bankruptcy will no longer be visible and you will be debt-free.
2. Reestablishing credit
There is no hard-and-fast rule for how long it will take to restore your credit following a Chapter 7 bankruptcy, but by the ten-year mark mentioned above, your credit should be as good as new. Instead, credit repair is dependent on a variety of factors. Your ability to pay current obligations, including your mortgage payment (if you've managed to keep your home), should be a top priority in your new budget.
3. Applying for a credit card that is not secured
Immediately after you file for Chapter 7 bankruptcy with your attorneys, you will likely be inundated with credit card offers professing to help you rebuild your credit. It sounds great, doesn't it? Unfortunately, these credit card ""offers"" come with considerable restrictions. In light of the fact that you cannot file for Chapter 7 bankruptcy again for eight years, you will need to find a means to pay off these high-interest credit cards. Cancelling the card will result in high fees, limited limits, and a hit to your credit score. Instead, wait until your credit score reaches approximately 700 before applying for a new card. Try secured credit cards while attempting to develop credit; you deposit the money in a specific bank account, and the bank offers you a """"loan"""" of 50-100% of that amount. Using this card each month will help you establish credit more quickly.
Purchasing a home
Doesn't it seem like the ideal time to go property hunting? With no debts looming over your head after a Chapter 7 discharge, you feel like you have more disposable income to invest in things like a new home. Unfortunately, you cannot participate at this time. If you are using a VA loan, you must wait two years after filing for bankruptcy before attempting to purchase a residence. A four-year waiting period will be required for a more conventional loan. Don't lose hope, however. In the interim, you can begin saving for a down payment. Put the monthly amount you wish to spend on a house payment into a savings account for the purchase of a home. In four years, you'll have a substantial down payment that will make obtaining the loan you desire much simpler.
5. Returning to your previous lifestyle
You have more money available now that you've reduced or eliminated your obligations, but you shouldn't immediately return to your previous lifestyle. Remember that it was your excessive spending that led to your bankruptcy in the first instance. Before attempting to live up to those standards again, you should develop responsible spending habits and wait for a change in your employment status and income.
Filing for bankruptcy after hiring Chapter 7 attorneys is a terrifying experience. Rebuilding after the war can be even more difficult. Contact us today for more information on managing your finances after bankruptcy.
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