You might be wondering what will happen after you file bankruptcy. It is not possible to open a new credit account right away. However, there are other ways to rebuild your credit. No matter if you're looking to open a new credit card or save your home, bankruptcy can help you rebuild your credit.
Rebuilding your credit score after bankruptcy
Your credit score will dramatically increase after filing for bankruptcy if you follow the right steps. Start by making your monthly payments on time. This is important because your payment history accounts for 35 percent of your FICO score. Positive financial habits are also important to improve your score. Credit cards should not be used for all your expenses. Instead, choose one bill that you can afford to pay off in full every month. Once you get up to speed, you can move on to new credit accounts.
Credit card debt is a big factor in your FICO score. Reduce your usage of credit cards with high balances. You should also start building an emergency savings account to avoid debt in the future.
Recovering from bankruptcy by getting a credit card
You must ensure that your bankruptcy debt is cleared before you apply for a credit card. Bankruptcy can have a negative impact on your credit score, and it will take anywhere from six months to five years to get your debt discharged. Chapter 7 bankruptcy and chapter 13 bankruptcy can be filed, which will eliminate most of your debt. Chapter 13, also known as a wage earning plan, requires you make monthly payments based off your income.
Once you have cleared your debts, you'll need to rebuild your credit score. This is essential if you hope to obtain a mortgage or a car loan. Your options with credit cards will be limited if your bankruptcy is filed. It is vital to read all terms and conditions before you sign any card. This will help to protect your credit score.
Saving your home after bankruptcy
Refinancing a mortgage after bankruptcy can help you save your home. However, you should be aware of the different options and risks before you make the big decision. First, you should know that you will likely have a difficult time getting a mortgage after bankruptcy. It is important to be prepared for large home maintenance costs, such as snow removal and landscaping. You should plan for this, even though it can be very expensive.
In addition, if you are facing foreclosure, you should file for Chapter 13 bankruptcy. You can file for Chapter 13 to stop collection activities against you and work out a payment plan.