Bankruptcy is so detrimental to one’s credit rating and the fact that a person has gone through it will remain on their credit report for a period of up to ten years. Nevertheless, there are ways to fix one’s credit rating after being bankrupt and the sooner they work on improving their credit score, the better.
Finding an Alternative Credit Solution to Eliminate All Existing Debt
Those who wish to fix their credit rating after bankruptcy should find credit solutions to pay all of their existing high-interest loans and credit card debts as soon as possible. If they have any left, they should use all of the money they have stored away in savings, at home, and anywhere else. If necessary, they should borrow money from their relatives or friends in order to pay such debts off.
Another thing individuals must start doing if they want to fix their credit rating after bankruptcy is to communicate and negotiate with their creditors. They might be surprised at how open creditors may be to negotiation especially when an original repayment plan may lead debtors to default on a loan.
If financially troubled individuals express their interest in making a new repayment plan, most creditors will accept such offers even if it means they will be receiving less in interest. Besides, some of them may even be sympathetic to the debtor’s situation and do what they can to help. Of course, this is only true if the proposed credit solutions do not totally compromise the interest of the creditors.
Starting Over Properly to Avoid Future Financial Trouble
Getting credit after being legally bankrupt will certainly be difficult. However, it is definitely not impossible. There may be creditors who will still be willing to extend a line of credit even to those who have just gone through bankruptcy. Nevertheless, the best option for bankrupt individuals is to stay away from all types of loans. They shouldn’t go looking for more financial stress while they are trying to find credit solutions build their credit rating back up, especially for at least the first three years after their case has been settled.
Apart from avoiding loans, individuals who have just gone through bankruptcy and are looking to fix their credit rating should keep away from accepting or applying for credit cards which are known to cause financial trouble very quickly. The interest rates associated with credit cards are not something that recently bankrupt individuals can benefit from.
Too many people fall into the same traps after declaring bankruptcy. This is because they believe that their settlement leaves them with a clean slate when it comes to their financial situation. They start over without knowing how important it is to first find a credit solution that will repair the damage that being legally bankrupt has caused to their credit rating. Before they know it, they are, once again, up to their eyeballs in debt within a matter of just a few years.
It may be difficult to learn how to live without credit for the first few years after declaring bankruptcy. However, those who try and work hard at it shouldn’t fall into any more financial problems. Once they learn how to manage their finances properly, they will be able to take out loans appropriately later on without having to worry about incurring financial debt that they cannot handle.