Life After Bankruptcy – Total Bankruptcy

Total bankruptcy or Chapter 7 bankruptcy is often called a ‘fresh start’ because getting a discharge under it means most of your debts will be wiped out in exchange for losing most of your property.

The losing property part is acceptable as those who file total bankruptcy owe much more than their assets and income can cover.

Besides, you may be allowed to keep your tools for work, some household furnishings, and your primary residence if there are no liens on it.

However, terming Chapter 7 a ‘fresh start’ can be misleading as it gives the impression that you will owe nothing once you get the discharge.

That is not true as it will not remove your obligations for taxes, child support and alimony, and student loans.

And if any loan is secured against some asset, it will only be removed once that asset has been liquidated and the proceeds used to pay down as much of the loan as possible.

Another thing that makes total bankruptcy something to be used in extreme circumstances only is its impact on your credit rating.

Not only will your credit score nosedive, the fact that you filed for Chapter 7 will remain on your credit report for 10 years.

Yet, circumstances such as job loss, medical conditions, divorce, small business failure, etc.

can make filing total bankruptcy a necessity.

If you are in such a situation, you must be worried about life after bankruptcy and wondering how can you do fast credit repair.

credit repair for bankruptcy

Arm yourself with knowledge, and you should be able to get through these difficult times.

Fast credit repair is possible, but for that, you need to make the best of the opportunity that bankruptcy has given you to get your finances in order.

Though bankruptcy wouldn’t have wiped out all your payment obligations, it must have removed a majority of them.

Set a budget for your expenditure from here on and stick by it.

Cut out any unnecessary spending, and if your income is still falling short, you need to make some major change like picking up extra work, or moving to a cheaper apartment.

Another thing you need to do is to start saving.

Bankruptcy must have wiped out your accounts, you need to build them back up.

Following your budget, whatever income that isn’t going for necessary expenditure should go into savings.

Build this habit so that you can grow wealthier and have a backup for another rainy day.

Next comes your fast credit repair.

Order your credit reports from all three major credit reporting agencies and go through them with a fine-tooth comb.

Dispute in detail each error you find and get them all corrected or removed from your reports.

This should help your credit score a little.

Then, get a couple of credit cards and an installment loan – you need to start adding positive accounts to your credit history.

You will have to accept high interest rates, but don’t agree to exorbitant fees.

Ensure that these accounts are reported to the credit reporting agencies.

Use the cards for necessary expenditure but don’t let the outstanding exceed 50 percent of their respective limits at any time.

Pay them off in full every month, and stay current on your installment loan.

Twelve months of this should see your credit rating recover enough for you to be able to refinance the loan and renegotiate the terms of the cards.

Within three to four years, you should be able to get another mortgage.