Reestablishing your credit rating and finances after bankruptcy is often a daunting task. If you file for bankruptcy with help from an Oklahoma City bankruptcy attorney, with a little discipline and patience, you can reestablish your credit and finances in just a few years after a bankruptcy.
How do you file for bankruptcy in Oklahoma? Is bankruptcy the right step for you to take? And how can your credit be reestablished after you file for bankruptcy? If you’ll keep reading, you will learn the answers about bankruptcy that so many families and consumers in Oklahoma need.
A number of factors can affect your finances, including education costs, medical expenses, and unemployment. A divorce can put immense pressure on anyone’s financial situation. Thousands of consumers and families are devastated by debts every year. They often consider bankruptcy.
Bankruptcy Isn’t For Everyone
Anyone can file for bankruptcy, but bankruptcy isn’t for everyone.
For some consumers and families, it is the best option. For others, a different solution may be less costly and achieve the same goals. It’s important to know your options. The right bankruptcy lawyer will carefully consider your situation before recommending any specific legal remedy.
What Are The Options For Personal Bankruptcy?
A Chapter 7 bankruptcy can help debtors discharge most debts, including credit card debt. Chapter 7 bankruptcy is for those with little or no income and no ability to pay their debts. Bankruptcy filers must pass a means test to qualify for a Chapter 7 bankruptcy.
The other option, a Chapter 13 bankruptcy, creates a realistic payment plan to pay your debts in three to five years. With either a Chapter 7 or a Chapter 13 bankruptcy, you must have the guidance of the right bankruptcy lawyer. A mistake or a misunderstanding could cost you dearly.
Discussed below are the steps you will need to take after a bankruptcy to protect your finances and reestablish your credit as quickly as possible.
Step #1: Pay Everything On Time And Stick To A Budget
When you file for bankruptcy, if you have never created or followed a budget, it’s time to start. Budgets help consumers manage their cash flow and avoid unnecessary debt. You should also set aside some cash for emergencies, which can wreck even your best budgeting plans.
After filing for bankruptcy, paying bills on time must become your priority. If you cannot pay your bills that are due, prioritize your payments, and cover your housing, food, and utility bills first.
Step #2: Get A Secured Credit Card
Obtaining a secured credit card will help you rebuild your credit score. A secured card lets you make deposits into a special bank account, and the account’s balance is your credit limit. By charging small items every month and paying your debts, you’ll slowly reestablish your credit.
Some banks may not find you eligible for a secured credit card after a recent bankruptcy. Make sure that your secured card will not mean high fees, and make sure that your payments will be reported to the credit bureaus. Pay what is due each month and do not pile up new debt.
Step #3: Learn The Truth – Educate Yourself About Credit And Debt
A lot of what you’ve heard about bankruptcy may be wrong. Many consumers and families who file for bankruptcy bounce back quickly and successfully.
If you’ve heard any of these myths or misconceptions, disregard them, because they are not true:
1. Myth: Bankruptcy automatically disqualifies you for a mortgage for seven to ten years. The truth is that you could actually be approved for certain home loans even while a Chapter 13 bankruptcy is pending.
2. Myth: Bankruptcy automatically disqualifies you for a credit card for seven years. The truth is that most consumers who file for bankruptcy can qualify for a new credit card within twelve months of a bankruptcy filing.
3. Myth: Auto dealerships and lenders will approve your loan application only at the highest interest rates. The truth is that some lenders and dealerships will approve a loan at a standard rate even after a bankruptcy.
How Quickly Can You Rebuild Your Credit?
While a bankruptcy can remain on your credit report for up to ten years, you can reestablish your credit rating quite quickly. In fact, when some consumers decide to reestablish themselves as good credit risks, they can restore their credit ratings in just six months to a year.
If you sincerely want to purchase a home after a bankruptcy, you probably can. It depends on how well you work to rebuild your credit. Some consumers will be able to buy a home only two or three years after filing for bankruptcy, but that won’t be possible for everyone.
If you’re committed to purchasing a home after a bankruptcy, you’ll have to boost your credit score and learn about your mortgage options. Each mortgage program has different requirements for homebuyers who’ve been through a bankruptcy, and lenders may establish their own criteria.
Of course, the best way to rebuild credit after a bankruptcy will be determined by personal circumstances. Some struggle for years after a bankruptcy to reestablish credit. As mentioned previously, others can restore their credit ratings in less than a year.
What Is A Bankruptcy Attorney’s Role?
Candidly speaking, a good bankruptcy lawyer can save you money in a bankruptcy proceeding. Even if it’s not your first bankruptcy, you will still require guidance from an attorney who stays current with the ever-changing state and federal bankruptcy laws.
The right Oklahoma City attorney will ensure that you avoid the mistakes frequently made by people who file for bankruptcy. When you file for bankruptcy, you’ll receive automatic protection from creditors.
The right bankruptcy attorney can also advise you about reestablishing credit – even while your bankruptcy proceeding is pending. If bankruptcy isn’t the right option for you, your bankruptcy lawyer will be able to recommend practical, effective alternatives.
Yes, There Is Life After Bankruptcy
Bankruptcy provides benefits and protections to consumers and families who need them, but bankruptcy also has some negative consequences. If you can avoid those consequences and find another solution with your attorney’s help, you should.
But if the best option for you is bankruptcy, you will discover that there is life after bankruptcy – and more. There’s also prosperity and credit for consumers and families who proactively take advantage of a personal bankruptcy and the fresh financial start that it provides.