The number one concern of most people who are considering bankruptcy is the effect a bankruptcy will have on their credit.  In some ways, this concern is merely a reflection of the consumer credit mentality that leads so many people to bankruptcy in the first place.  The purpose of this article is to offer strategies for improving your credit and your credit use after bankruptcy.

1.    You Must Alter Your Spending and Saving Habits.

In the days before credit cards, people saved money to cover events like broken pipes and leaky roofs.  They anticipated large purchases, and they saved for those too.  However, when credit cards became popular among the masses, we began to replace savings accounts with credit limits.  Instead of money in the bank, we had a credit card with a $5,000 limit in case something came up.  The problem with this mentality is that the first time you have to use that card to buy something you can not afford to buy with cash, you are behind, and many people never catch up.  

If you have emerged from bankruptcy, you may be debt free for the first time in your adult life.  The best thing you can do for yourself and your credit is to change your behavior right now.  Make a budget, institute a savings plan, and learn to live without credit.  Only when you have taught yourself how to save money will you be ready to handle credit responsibly.  

2.    Pay All of Your Remaining Debts On Time.

If you kept your car or your house, or if you had student loans that were not discharged, it is critically important that you pay all of these bills every month on time.  Establishing a history of on time payments is critical to rebuilding your credit.

3.    Do Not Take on Any New Debts or Credit.

Some people will tell you to go out immediately and get yourself a secured credit card, but I think this is a terrible idea.  For at least 18 months after your bankruptcy, I believe you should focus on getting your financial house in order.  Pay off your car and keep driving it.   Enjoy the feeling of not having a car payment.  See how much more money you have every month when you are not using all of it to pay for consumer goods you no longer even own.  It is too easy to get back into trouble if you jump right back into the credit card game.

4.    Save as Much Money As you Possibly Can.

For eighteen months, save every penny you can.  Put the money in a bank account, buy a short term certificate of deposit, or put the money under your mattress.  You need to re-wire your brain to think about expenses you know are coming and put aside money to cover them.

Having cash set aside somewhere is the best way to avoid problems with credit in the future.  A healthy savings account will also lessen the effect of a spotty credit history by giving you a nice cushion for credit purchases it is difficult to avoid.  Buying a house is a good example.  If you try to get 100% financing for a house 2 years after a personal bankruptcy, no bank in the country is going to want to write you that loan.  On the other hand, if you have a substantial down payment, you are showing the bank that you can be responsible with money and that you will also be invested in the house.  You will have a much easier time getting the loan you need.

If you know you will need a new computer in twelve months, or you see that the tires on your car are looking worn, there is no reason in the world you need a credit card or a good credit rating to make those purchases.  If you can learn to save money for these things instead, you will finally defeat your credit demons.  Even if you feel like you are spending your savings just as quickly as you put them aside, you are still much better off than if you were using borrowed money to make the purchase.  

5.    After an Appropriate Time Begin to Selectively Apply for New Credit

Between 18 and 24 months after your Chapter 7 discharge, get a copy of your credit report and score.  Take a look at where you were two years ago and where you are now.  Chances are, your credit score has actually improved since the last time you checked it.  You are no longer swimming in debt, and you should be building a good history of on time payments.  Now you might feel like it is time to get another credit card.

At this point I would recommend that you get yourself a secured credit card.  The only reason I recommend that you have a credit card at all is because you will need one if you ever have to rent a car.  Car rental places do not like debit cards.  Other than that, try to not to use the secured card.  

If you feel like you need to use the card every month, try using it for only one monthly expense that you know you will be able to pay.  Perhaps you can make it your gas card.  Whatever you do, pay the credit card off in full every month.  Nobody knows better than you what happens when you begin to carry a balance, so resolve that you will never do it again.  If you find yourself unable to pay your credit card balance every month, put the card in a drawer and do not use it again for another 6 to 12 months.  You are not yet ready to have a credit card again, but stick with the plan and you will be soon.

Remember that your credit score is just a reflection of your credit habits.  Follow these simple steps, and you will see your credit score rise every month.  Better still, you may find that your credit score is no longer as important to you as it once was because you have learned how not to live on credit. 

For more information please visit: http://www.floridalawattorney.com

Did you know that declaring bankruptcy in the United States involves the federal bankruptcy court? It’s true that some details such as your homestead exemption will vary from state to state, but the main laws were passed by Congress and are administered by a federal judge. How can this federal judge help you with those annoying debt collectors?

Well, in case you didn’t realize it, one of the great provisions of bankruptcy is something known as the automatic stay. This means that when you file for bankruptcy with the court creditors are told to keep away from you temporarily while you settle your case. Those annoying bill collectors and creditors cannot even contact you after you have filed for bankruptcy. If they do, they will have to answer for a federal judge and can face hefty fines.

Now this doesn’t mean that the bankruptcy judge is guaranteeing that your credit card bills and other unpaid debts will be wiped away. You still have to go through the process, accompanied by a good bankruptcy lawyer, in order to see whether you qualify for a discharge in Chapter 7 bankruptcy (or a repayment plan in Chapter 13).

At the very least, you’ll get some much needed rest from those harassing bill collectors who constantly stress you out. If your case is successful, then you could very well have those bills discharged (which means they would be wiped away).

You obviously have to study your case carefully with the help of a professional before deciding whether bankruptcy is right for you. After all, it can have some long-lasting effects on your credit score and financial reputation. If your situation is bad enough, then these repercussions really won’t matter to you. Even so, you want to make sure you are making the best decision for your financial future and that of your family.

For more information please visit: http://www.floridalawattorney.com

In general your home will enter into the foreclosure process after the third missed payment. At this point you will no longer be able to make partial payments or even whole monthly payments. Once you have reached this point you will need to pay all the missed payments plus any legal or collection fees as well as late penalties that have accrued in full.

However, this can be negotiated with your mortgage lender if you intend to pay your full payments from now on by adding the amount of the missed payments and all other fees to the total amount of your mortgage and then spread out through the remaining life of the loan. For example let’s say you owe $325,000 on your mortgage and your monthly payments are $2,600 for another 15 years.

Then let’s say you lost your job and were unable to pay your mortgage for three months. Then you found gainful employment with the same salary range as before so you are able to make your general monthly payments but do not have enough to pay the back payments and fees. Let’s assume the accrued amount owed equals to $10,000. Your mortgage company may be able to spread out that $10,000 throughout the remaining 15 years of your loan which will only add around $55 per month to your monthly mortgage payments.

You may be eligible for the scenario above until the sheriffs sale commences typically after the seventh missed payment. Once the sheriff’s sale commences you will enter into your redemption period. This one is different from state to state, however it typically can last anywhere from three to six months. During your redemption period you will have the option of reclaiming your home if you can pay the entire mortgage in full.

For more information please visit: http://www.floridalawattorney.com