How to Navigate Life After Bankruptcy

Our Charlotte Bankruptcy Law Firm Will Guide You Every Step of the Way

Among the many myths pertaining to bankruptcy is that life after bankruptcy will be uncertain and difficult. Many believe that they will lose their home and have ruined credit for the next decade. At the Law Office of Jack G. Lezman, PLLC, our Charlotte bankruptcy lawyer can help you understand what bankruptcy is and how to rebuild your life after bankruptcy. We have substantial experience with a variety of bankruptcy circumstances, helping families get the financial relief they need. Prior to filing, it is important to know how bankruptcy can help you in the future and how each option will change the outcome. Please do not hesitate to speak with an attorney from our Charlotte bankruptcy law firm.

How to Rebuild Credit After Bankruptcy

One of the major areas of concern for those who have recently cleared their debts is how to rebuild credit after bankruptcy. Initially, you’re probably relieved that you can now conduct your finances in peace without being harassed by creditors and having thousands of dollars hanging over your head. But you also have to consider the fact that your bankruptcy will be on your record for 7 years if you’ve filed for Chapter 13 and 10 years if you’ve filed for Chapter 7. In other words, if you need credit, it may be hard to come by. The situation is not, however, as dire as you may think. Firstly, you have to consider the fact that you will not be allowed to file another bankruptcy for another 7 years. Potential creditors are very aware of that. At the same time, much of your outstanding debt has been cleared. In other words, you’re not as much of a risk to creditors as you might think. That being said, creditors are going to be checking your credit report and your credit report will show a recent bankruptcy. This much is true. The more recent a bankruptcy is, the more suspicious a creditor will be of your bankruptcy. That means that you will have to earn their trust back. Luckily, there are a number of ways to do just that.

Check Your Credit Report

First things first. You want to make certain that your debts have been cleared from your credit report. Creditors can be unmotivated to clear discharged debts from your report and may need prodding in order to remove the debt from the report. It is imperative that you take action because this can improve your credit score. A bankruptcy attorney can help with this process. Life after bankruptcy begins when your credit report accurately reflects your current active debts. You don’t want a bankruptcy on your record plus a number of outstanding debts that have already been discharged by the bankruptcy.

Secured Credit Cards and Loans

Your situation is unique, but generally speaking, secured credit cards and secured loans are the first steps to rebuild your credit after bankruptcy. Life after bankruptcy continues to unfold as you attempt to rebuild your credit. Too many people believe that filing for bankruptcy means that they have irrevocably destroyed their credit for life. That simply isn’t the case. There are a number of ways that you can restore your reputation in the eyes of potential creditors. It will take time, but it is not impossible. Secured credit cards and loans are two such ways to begin building credit.

What Is a Secured Credit Card?

A secured credit card is like a regular credit card except that instead of being given a loan, you make a deposit on the card. The deposit is equal to the card’s spending limit. The deposit also gains interest. In other words, you will get $500 line of credit using $500 as collateral against a default. You can use the collateral to pay off the credit card, but that can reduce your maximum. In exchange, the credit card company reports your good (or bad) behavior to your credit report. Eventually, potential creditors will recognize that you are serious about rebuilding your credit. This is yet another step toward rebuilding your life after bankruptcy.

What Is a Secured Loan?

A secured loan is another option for those seeking to rebuild their credit after bankruptcy. A loan can be secured against an asset or it can be secured against a cash deposit. What makes the loan secured is the fact that it is insured by some form of collateral. Examples of things you can use to secure a loan are:
  • Cash accounts
  • Cars
  • Homes
  • Investments
  • Insurance
  • Collectibles
For those coming out of bankruptcy, the best option is a cash account. It works just like a secured credit card. You deposit money into an account, and the bank gives you a loan for that amount of money. You then repay the loan back incrementally while not missing any payments. It may sound like an elaborate way to accomplish nothing, but the bank will report your activity to your credit report. This will improve your credit! Your life after bankruptcy has just gotten a bit better.

Secured Cards and Loans Must Be Handled Properly

Aside from making sure that you pay off your debts in a timely manner, you also must ensure that the bank or credit card agency lists this transaction as an active debt on your credit reports. You want to ensure that this information is passed to all your credit reports. In other words, you want to make sure you’re getting credit for your credit debts. If you’re using a secured card to rebuild your life after bankruptcy, then you want to make sure you use the card on a monthly basis, then pay off the balance. This information will be relayed to your credit report and show that you have a positive history of responsibly making monthly payments. You also don’t want to spend too much of your available balance. This can cause your credit score to go down. Life after bankruptcy is about changing your approach to managing your finances. It cannot be about making the same mistakes twice.

Protecting Your Assets

In a Chapter 13 bankruptcy, all of your property and assets will be kept safe because you are paying off your debts in a more manageable manner. A Chapter 7 bankruptcy does have its advantages, but you risk losing some of your valuable property. If you are concerned about losing your possessions, you may still be able to keep some possessions, such as your car. After a bankruptcy, however, you are given back the ability to reasonably pursue the objects you possessed. Bankruptcy can set you back on the right track to financial freedom. You can rebuild your life after bankruptcy. It is important, however, to establish a financial plan to avoid a second debt spiral. Immediately after filing for bankruptcy, creditors are required to immediately stop calling and performing their illegal harassment techniques. Also, repossession and wage garnishments must come to an end.

Contact a Charlotte Bankruptcy Attorney to Learn More About Life After Bankruptcy

By enlisting the legal assistance of a Charlotte bankruptcy lawyer at our firm, we can ensure that your rights are protected and that you are left alone from creditors. Take the time to obtain a free case evaluation with our firm. Please do not hesitate to speak with an attorney from our Charlotte Bankruptcy Law Firm. Life after bankruptcy is about taking back control of your finances. Contact the Law Office of Jack G. Lezman, PLLC to speak with our Charlotte bankruptcy attorney.
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