For many people, filing for bankruptcy is the best option to obtain relief from crippling debt. Unfortunately, a bankruptcy can also have a negative impact on your credit for years to come. As such, if you're planning on filing for bankruptcy, you'll also need to have a plan in regards to how you're going to rebuild your credit and get on the path to a more successful financial future.
DO Have a Plan Before You File
Don't wait until after you've filed for bankruptcy to start thinking about how you're going to rebuild your credit. This is something you'll need to be proactive about, so it's best to start coming up with a detailed plan right now. Start by considering your monthly cash flow and coming up with a budget that you can comfortably stick to, as this will help prevent you from falling into debt in the future.
DON'T Shy Away From Credit Cards
You might be understandably nervous or apprehensive about the idea of opening up credit cards after you've filed for bankruptcy--especially if credit cards were what got you into financial trouble in the first place. However, credit cards can be a powerful tool for rebuilding your credit score, so long as you pay them off in full with each billing period. Consider opening a secured credit card, which is specifically designed to help people just like you build their credit after a rocky financial past.
DO Monitor Your Credit Closely
There are so many free and paid credit monitoring services available these days, so it's in your best interest to subscribe to at least one of them. This will allow you to keep a close eye on your credit scores from all three of the major reporting bureaus so you can see your progress and notice/dispute any errors as they occur. Consider checking out a free service such as Credit Karma, which will allow you to monitor your credit and explore other helpful financial tools.
DON'T Assume You Can't Get a Loan
Finally, even if you've filed for bankruptcy, understand that there are ways to obtain loans, such as auto and home loans. If you need a car or are ready to take on the responsibility of owning a home after you've filed, don't assume you won't be able to get approved. Search specifically for loans that are designed for those who have bankruptcies on your record and you'll be sure to find a lender that's willing to work with you.
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