Many consumers who find themselves in financial holes struggle mightily to whittle down their debt loads. In truth, they wait far too long to file for Chapter 7 bankruptcy than they should.
Many delay because they don’t want to absorb the hit to their credit scores that accompanies bankruptcy. The reality is that anyone who is contemplating bankruptcy is already facing a lower credit rating. Read on for a few tips for those rebounding from bankruptcy.
Learn from your mistakes
At some point, all bankruptcy filers must complete both credit counseling and debtor education courses. Absorb the lessons you were taught to avoid falling into the same debt patterns as before. Make conscious choices that support a path to financial literacy.
Build an emergency fund
Ideally, everyone should have a fund that will pay their expenses for six months in an emergency. The bare minimum should be enough to cover a three-month span.
Open a secured account
Once you’ve built up your emergency fund, it’s time to consider getting a secured credit card to rebuild your credit. By making regular payments on time and paying down balances, you will soon qualify for unsecured credit. Use it responsibly.
Mix it up a bit
Want to jumpstart your credit score by as much as 70 points? Credit from different sources can boost the credit scores of recent bankruptcy filers. Use companies like RentReporters or RentTrack to report timely rental payments to the big three credit bureaus.
Want to learn more?
If you have put off filing for bankruptcy due to fear of lowering your credit score, you might be surprised at how quickly many filers rebound from a Chapter 7 bankruptcy.