Submitted by Rachel R on Mon, 12/21/2015 - 10:00am
Don't do this after bankruptcy
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For those that choose bankruptcy to help deal with overwhelming debt, it’s usually an action of last recourse. After getting into trouble with their finances, consumers often feel burned and aren’t sure what to do next. Chapter 7 can help unload the debt you can’t afford to pay, but what then? The actions you take and don’t take after bankruptcy will drastically affect your financial future. Here are five things to avoid after your Chapter 7 – and what you should do instead to improve your credit score after bankruptcy.
#1 Don’t avoid new credit
Many people who get into a money mess and choose bankruptcy to help get them out of the jam come out of the process scared of credit. They don’t want to get back into a financial freefall again, so they think the answer is to avoid credit. This is not the way to go. Having a low credit score will cost you more in car insurance, utilities, and other credit-dependent aspects of your life. It can also cost you a job opportunity or a promotion. You need to rebuild your credit wisely, use your lines of credit sparingly, and take a slow and steady approach, so you avoid future trouble. But avoiding credit isn’t the right approach.
#2 Don’t fall behind on your bills
It’s critical after you get a Chapter 7 discharge that you are timely in payments of all bills that survive the bankruptcy. If you have a car loan or mortgage that are still in place afterwards, keeping up with these payments is critical. To make the most of the fresh financial start that bankruptcy offers, you should come out of the gate with a budget, spending limits, a savings plan, and financial goals for the future. Keeping up with all your bill payments is a foundation for your more prosperous financial future.
#3 Don’t ignore credit report problems
You should pull your credit report before you file bankruptcy to ensure that all of the eligible unsecured accounts are included in your bankruptcy petition. Then, a month or two after you get your Chapter 7 discharge (which usually come three to four months after you file), pull your credit report again and look for any errors. Some accounts may not show up as part of the bankruptcy. Be sure to check all three credit agencies and send paperwork and requests for correction for any errors that you see.
#4 Don’t avoid the hard work
Setting financial goals, establishing a budget, and fighting to get your credit report corrected are all hard work, but are necessary. The easier way is just to muddle on through without changing your habits or making a solid plan for your financial future – but that’s not the way to rebuild your credit score after bankruptcy. Knuckle down and take care of things and you’ll be much better for the effort.
#5 Don’t be scared to talk to your lawyer
Even after your bankruptcy is filed and you’ve obtained your discharge, there are things that you should talk to your attorney about if they arise. For instance, if creditors refuse to correct the credit report to show your bankruptcy, your attorney can sue them for breaking bankruptcy law and obtain a settlement plus the legal fees to pursue the correction. Also, if creditors continue to call you for a bill that was wrapped up in the bankruptcy, that’s a clear violation of the law, and your attorney can pursue them for damages and force them to make the correction.
The bottom line is, bankruptcy is not an end – it’s a beginning. And to get the best results, you should take advantage of your fresh financial start. In the beginning, there will be a little hard work to get yourself on the right course, but after that, you can enjoy the fruits of your efforts, and that includes an improved credit score and a brighter financial future.
Contact the Law Offices of John T Orcutt to find out more about how North Carolina bankruptcy can get you out of unsustainable debt. Call +1-919-646-2654 for a free NC bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
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