Some of our clients come to our bankruptcy attorney office in Los Angeles to ask about how bankruptcy can affect their credit score. The good thing here is that filing for bankruptcy can assist you in improving your credit score. It is especially beneficial if you have a low number.
Not the End of the World
After filing for bankruptcy, it is not the end of the world. Rather, it is the start of a new chapter of your life. It is actually the first step to re-establish your status to have good credit.
Before you even file for bankruptcy, make sure that you have consulted with a bankruptcy attorney. At KE Law Firm, we offer guidance to our clients who are serious about getting their credit score fixed and repairing their financial status.
How to Improve Credit Score
A credit score is based on the data accumulated over a period of years. A credit scoring company needs at least six months of data to produce a score.
Start a Budget
You need a budget so you can monitor your spending and finances. Our bankruptcy attorney may also assist you in getting help from a credit counselor.
Once you have a budget, you should start building an emergency fund. Having at least $250 in savings can protect you from looking for payday loans or using your credit cards, which can begin a new debt cycle.
Begin a Credit Strategy After Bankruptcy
In the eyes of credit card issuers, you are not an outcast, contrary to popular belief. However, you need to prove that you can repay them. The problem here is that you creditors know a lot about you.
Thus, it is best that you assess your situation. You can do so by checking your annual credit reports. If you find errors in those reports, make sure to get them fixed.
You will find inaccurate negative information about your financial status. In fact, the reports will show bankruptcy that happened 10 years ago. Although chapter 7 filling could erase your debts, it will not wipe clean your credit reports.
Do not feel bad about the credit score you get after bankruptcy. The reason for this is that the score is quite higher than before filing for bankruptcy.
Get a Secured Loan
It is one way to improve your financial profile while you are working on restoring your credit score. You need to prove to the lenders that you are not an extremely risky borrower.
You can get a secured loan from a credit union or a community bank. Some secured loans let you borrow money against the money you already have on your bank account. You cannot use such money until you have paid off your debt or loan.
If you need a credit card, consider getting a secured credit card. It is a type of credit card that is backed by the money you have in your bank.
The credit limit is the total amount of money you have on deposit. It has annual fees, however. It also carries high-interest rates. Since this card is not necessary for the long term, you can use it to remedy your credit score.
Why File a Bankruptcy if It Could Affect Your Credit Score
Filing for bankruptcy is typically the right step to do to protect yourself from any collection activities. It will also stop foreclosures, license suspensions, and repossessions, among others. This step will also stop creditors from harassing you.
The automatic stay is only temporary. In that case, you must work with an attorney. Call our bankruptcy attorney office in Los Angeles to know more about how automatic can affect your financial status.
Our bankruptcy attorney will discuss the pros and cons of filing a bankruptcy. After knowing those advantages and disadvantages, it is up to you to decide whether to file or not. However, filing a Chapter 13 bankruptcy, for instance, will protect your assets or those things that you own.
Then again, there are exemptions to this rule. That’s why it is vital that you hire a bankruptcy attorney to identify which assets are protected and which are not.
Work with an Attorney
You should not do it on your own when filing for bankruptcy. Rather, you must work with an attorney to help you walk through the steps. Your attorney will do everything to prove your eligibility for a debt reorganization.
Filing for bankruptcy is complex. Keep in mind that skipping just one step or filling out an incorrect form can result in your case being thrown out. Also, if you misfile or skip a step, some of your debts will not be protected or covered.
By hiring an attorney, your lawyer will fill out those necessary forms so you will not miss anything. If you have decided to file for bankruptcy, make sure to visit our bankruptcy attorney office in Los Angeles to discuss your options or call us at (818) 918-9660.