The number of people filing for the bankruptcy has decreased considerably. Bankruptcy does not mean that the financial stability of the person has been demolished and that he has to live hand to mouth. It is a way to restructure the finance and the people can make a new start.
What will happen to your credit report?
After filing for bankruptcy, your credit report will carry the information for ten years. The debts that have been forgiven would remain on the report for 3 years. Most of the lenders and credit card companies would not feel comfortable having business with those who have the bankruptcy indication on their credit report. However, there are a few companies which would help to provide the credit for such people. It is very essential to make sure that you use the credit to such an extent that you can repay it, in totality.
Credit card after bankruptcy
After bankruptcy, it is not possible to get a mortgage, loan or even a credit card. To get a credit card, he much have it signed off by a family member, who is not bankrupt. The credit limit and the other features of such a card would be very low and if he keeps up with the payment, then his credit rating would increase.
Buying house after bankruptcy
You would not be eligible for the mortgage immediately after the bankruptcy. After a few years of paying all the bills in full, you can save at least 20% of your earnings. This would help to create a positive credit score which would help in the down payment and also would be a favorable element for the mortgage application.
What to do after bankruptcy? First, get your credit report and deal with all the outstanding debts. Clear your report and analyze all the incomes and expenditures. Cut the expenditures to bare minimum and start saving your emergency fund. An emergency fund should be equal to one month’s salary.
Start building the credit score as stated above and develop positive histories. The other best way to increase the credit score is, after it is stabilized, is to get a small personal loan. Do not opt for big amount. Do not use the loan amount for your expenditures. Pay back the loan after a month or so. This would create a positive credit rating as you have paid off your whole loan. Do not use this method very frequently as it would indicate financial instability. You can also get financial help from the professionals, in terms of restructuring your finance.