Life After Bankruptcy: Chapter 7 vs Chapter 13

Consumers often get confused as to what the difference is between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy. The difference is simple. In a chapter 7 bankruptcy the consumer pays absolutely nothing back prior to filing for bankruptcy and in a chapter 13 scenario the consumer attempts at paying back part of the debts owed. However, there is still uncertainty as to the effects and impacts of the each on individual credit reports. It however may interest you to know that it is possible to rebuild credit after bankruptcy and it is possible to get back on your two feet. However is is essential that you take the right steps.

Rebuild Credit After Bankruptcy

In order to rebuild credit after bankruptcy, you must work on your credit report in a systematic manner.Make an attempt towards obtaining credit after bankruptcy and it will help you a long way in improving your credit score after bankruptcy.

1. Obtain Your Credit Report: After being discharged from bankruptcy, it is advisable to obtain your credit score to gauge your credit score at the point in time. It may surprise you but clients have been known to emerge with credit scores of well in excess of 600 post their bankruptcy periods. Once you have your credit score you can charter a path for credit repair after bankruptcy. It may be beneficial to regularly obtain your free credit report on an annual or semi-annual basis to track your progress.
2. Make Your Repayments During The Bankruptcy Period: At times certain debts are not discharged with bankruptcy. The court may order you to keep making repayments on certain loans even after filing bankruptcy. These often include debts like federal debt or student loans etc. While in your bankruptcy period it is very important that you keep making these payments and make them on time and if possible make higher contributions.
3. Obtain Secured Credit: You will find that in your life after
   

   Obtaining New Credit Is Important After Bankruptcy

   bankruptcy, it is extremely difficult to obtain credit or credit cards due to a poor credit score after bankruptcy. Even if you do, they will be with very low spending limits and with relatively higher interest rates. The way around this issue is to obtain a secured line of credit loan or a secured credit card. What this means is that you will have to place your own funds as security equal to the line of credit or credit card. If you keep paying off your balance in full each month, at the end of a couple of years you should be able to obtain a regular credit card or line of credit. This is an excellent method to help you out with credit repair after bankruptcy.

4. Prepare A Budget: Once you have come out from your bankruptcy period it is important to learn from your mistakes. Prepare a budget and try to ensure that you are making higher contributions than your minimum loan repayments to help build your credit score after bankruptcy.
5. Obtain Short Small Amounts Of Credit: In your life after bankruptcy, it is important that you obtain small amounts of credit and pay them of as soon as possible. While living without debt is advisable, you cannot live completely on cash as that will not improve your credit score after bankruptcy. Obtaining small amounts of credit and paying them off will help with credit repair after bankruptcy.

It is important to remember that while bankruptcy is very serious and affects your credit score in the worst possible way, it is not the end of the road and there is life after bankruptcy. With corrective steps and by following the tips to improve your credit score after bankruptcy you could be on the road to recovery and on to a healthy credit score.

References:

1. Bounce back fast after bankruptcy – MSN Money
2. Credit after bankruptcy – Moran Law
3. Chapter 7 impact on credit – Bankrate

What to do if a black mark appears on your credit report as a result of a missed payment or a delayed payment. It’s a terrible thing to have onto a credit report. First, one should do the utmost effort to avoid from such a situation. If by chance, such a thing happens, then start finding the solution to resolve the problem and get off those items from his credit report.

This method is also known as ‘Credit Repair’. It’s been offered by many organizations that they can help you do the required task. You can do the needful yourself too, provided that you are proficient in financial matters. It must be know beforehand that it is a time taking work and needs full attention.

If you have hired any agency, it is not your headache then. When you are doing it yourself, things which are most bothering must be noted as primary, then start taking them up systematically. Get your copy of credit reports from all three bureaus, because there are things which are on one and are missing on the other.

Also note that there are certain black marks which are taken off from the credit report after a period of seven years. Some serious matters like bankruptcy stay on the credit report for as long as ten years. Such records may not be easily taken off of your credit report, but then you can try to resolve the issue and vanish it.

Contact the creditors at first, and let them know that you are interested in paying off the pending. There are possibilities that you will be given leverages of 50% as a settlement of account. In this case of delinquent account resolve, you might need the assistance of a professional firm.

If you doubt a negative entry on the credit report, you must contact the collection agency or the creditor. Inquire about the entry and write well drafted letters to the agencies. It is likely that the agency will take some time to answer your queries. It is beneficial for you if the said company, agency or creditor do not reply within 30 days. If happens so, the negative account will be automatically removed from your credit report by the company.

No matter, it is a time taking procedure, but mark, it is worth doing. Most of the times it is not possible to get items off your credit report, but by following these tips you might get some help. For caution sake, always try to make timely payments and make it a habit to check your mail and keep track of your bills to avoid missing out anything.