Rebuilding your finances and credit rating after bankruptcy may be a formidable task. However, after you file your bankruptcy petition with the help of a lawyer handling clients with bankruptcy, you may be able to rebuild your finances and credit in only several years.
How does someone declare bankruptcy in Colorado? Is bankruptcy right for you? How can you restore your finances and credit after the bankruptcy process? If you’ll continue reading, you will find out the facts that consumers and families in this state need about the bankruptcy process.
You will also learn about the services, insights, and advice that the right Colorado bankruptcy lawyer can offer you both before and after you file for bankruptcy.
It’s Not for Everyone
A variety of factors may impact your finances: unemployment, medical debts, and education costs, for instance. Divorce can place considerable pressure on your finances. Thousands of families and consumers are devastated each year by their debts. Many consider bankruptcy.
Anyone may file a bankruptcy petition, but – and this cannot be stressed strongly enough – bankruptcy is not for everybody. For some families and consumers, bankruptcy will be your only practical, realistic option for resolving debt problems.
For others, another solution may achieve your goals less expensively. A Colorado bankruptcy lawyer will consider your circumstances and review your options and alternatives before suggesting any particular legal solution.
What Are Your Personal Bankruptcy Options?
Chapter 7 bankruptcies eliminate unsecured debts such as medical debt and credit card debt. Bankruptcies under Chapter 7 are for persons without any income or ability to satisfy their debts. Qualifying for bankruptcy under Chapter 7 requires you to pass a means test.
The other personal bankruptcy option is a Chapter 13 bankruptcy, which establishes a practical and realistic schedule for paying off your debts over three to five years. With a Chapter 13 or Chapter 7 bankruptcy, the right lawyer’s guidance is imperative. Any mistake could be costly.
Discussed here are the measures you should take after the bankruptcy process to restore your finances and credit as early as possible:
Step #1: Stick to Your Budget and Pay Every Bill on Time
If you are filing for bankruptcy, and you’ve never set up or stuck to a budget, this is the time. Consumers use budgets to avoid unnecessary debt and manage cash flow. You also need to put away some cash in case of emergencies, because emergencies can wreck the best budgeting plan.
Paying your bills in a timely manner must become a priority. If you can’t pay everything that’s due, prioritize the payments, and cover food, housing, and utilities first.
Step #2: Obtain A Secured Credit Card
A secured credit card can help you reestablish your credit. The card lets you deposit funds in a special account, and that account’s balance becomes your new credit limit. Charge small items each month, pay all of your bills and debts on time, and slowly, you will restore your credit.
At some banks, you will not qualify to receive a secured card immediately after a bankruptcy. Be sure that the secured card you are issued will not entail excessive fees, and ensure that the payments are reported to credit agencies. Don’t incur any new debts.
Step #3: Educate Yourself
What you hear about the bankruptcy process may be inaccurate. Disregard these common myths about bankruptcy:
- Myth #1: A bankruptcy automatically makes you ineligible for a mortgage loan for the next seven to ten years. That is not true. You could realistically be eligible for some home loans while your petition is pending for a bankruptcy under Chapter 13.
- Myth #2: A bankruptcy automatically makes you ineligible to obtain a credit card for the next seven years. That is not true. Many consumers in Colorado who file a bankruptcy petition are eligible for a card within a year of filing for bankruptcy.
- Myth #3: Automobile dealers and lenders approve loan applications after a bankruptcy at only the maximum interest rates. That is not true. Even after you file for bankruptcy, most dealers and lenders approve your auto loan – with a standard interest rate.
How Long Does Restoring Your Credit Take?
Even though a bankruptcy may appear on a credit report for as long as ten years, restoring your credit takes much less time. In fact, if you make it your priority, it may be possible to restore your credit rating in less than a year.
Moreover, if you want to buy a home after your bankruptcy, you’ll probably be able to. It all depends on the actions you take to restore your credit. While you may be in a position to purchase a home within two or three years of a bankruptcy, that is not a possibility for everyone.
If buying a home is a priority for you after bankruptcy, you will need to raise your credit score and investigate your mortgage alternatives and options. Every mortgage program and lender has its own criteria for homebuyers who have endured the bankruptcy process.
Of course, your personal circumstances will determine how successful you are at restoring your finances and credit after a bankruptcy. Some people must work hard for many years to rebuild their credit. Others are able to reestablish their credit in under a year.
What Will a Colorado Bankruptcy Attorney Do on Your Behalf?
The right Loveland bankruptcy lawyer will help you through each stage of the bankruptcy process. Even if you previously filed for bankruptcy, you may need guidance from a lawyer who stays up-to-date with the constantly-changing federal and state bankruptcy laws.
The right Loveland bankruptcy attorney will help you avoid costly mistakes. During and after your bankruptcy, that attorney can also help you with advice for restoring your credit.
Be sure to talk to an attorney first, because if bankruptcy is not your best option, your bankruptcy attorney will help you explore effective and practical alternatives to bankruptcy.
If You Have Another Option, Take It
Bankruptcy protects and benefits families and consumers who are struggling to pay debts, but bankruptcy also entails some severely negative consequences. Avoid those consequences if you can. If you and your attorney can find and agree on another solution, pursue it.
Nevertheless, if bankruptcy is your only practical and realistic option, you will find that there’s life after bankruptcy. There is also good credit and even prosperity for families and consumers who take the best advantage of bankruptcy and the financial fresh start it offers.