If you’re either currently in a Chapter 13 bankruptcy proceeding or are thinking about starting the process, one of your biggest fears might be around rebuilding your credit once the repayment process is complete. Perhaps you’re looking to protect certain property or already have significant income – regardless, you will have the bankruptcy on your record for seven years. Once you’ve shown the court that you’re current on child support, alimony and have completed budget counseling and repayment, you can begin the road to credit recovery.
Getting Friendly With Your Credit Score
A clean credit report will be your biggest help towards rebuilding your financial reputation, and you won’t have that for at least seven years (longer if you incur any late payments or delinquencies). You’ll want to track your score monthly using a trusted service and get an idea of how good credit habits add points to your score in a given period.
Find a Credit Product That Works for You
Bankruptcy makes it difficult to access credit that responsible borrowers can typically obtain. While in the rebuilding process, you could try for a secured or “credit-builder” loan, which involves borrowing money you have already deposited with a bank or made to you through a savings account that you have to pay into to withdraw funds. The point is to establish a feasible model to make monthly payments to gradually restore your creditworthiness.
You could also ask a trusted friend or family member to co-sign with you on a loan, but that’s asking a lot of him or her as it puts their credit reputation on the line as well. It goes without saying that a lack of transparency about your financial willingness can damage or sever relationships.
Create a Budget and Stick to it
Put the credit counseling you went through to work and build a realistic budget that you can plan around and maintain. This is a foundational step towards rebuilding your credit and your bank account balances. It could also help you build an emergency fund, which is another responsible way to save some of the income you earn.
Natural State Law prides itself on being a compassionate and trusted source for Arkansas residents working through the Chapter 13 process. Our team will stick with you through the end of the repayment plan and help you start on a path towards good financial health. Call (501) 916-2878 to learn more and schedule a free consultation.