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NJ Bankruptcy 911 Checklist
Life After Bankruptcy

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The good news is that yes, there is life after bankruptcy! Like other setbacks in life, you can make a recovery. There may be different paths of recovery for each form of bankruptcy, but there is always hope!

Rebuilding your life after bankruptcy — including your credit score and finances — can sometimes seem like an overwhelming task, but it doesn’t have to lead to a life where you’re treated like a financial outcast and banished to years of credit exile. To that end, please consider the NJ Bankruptcy 911 Checklist for Life after Bankruptcy.

1. The most commonly asked question I get when I consult with a new client is,
“It is on my credit report for 10 years, right? or
“I cannot get credit for 10 years, right?” or
“I will never get credit again, right?” or
“I won’t be able to buy a house, right?”

The good news is that there is life after bankruptcy and no, it does not take 10 years before you can rebuild your credit! In fact, for a lot of people filing bankruptcy is necessary in order to rebuild their credit. Why, you might ask? Well, how can you rebuild your credit without first wiping out the debt you already have? For example, if you make $40,000.00 a year, how can you rebuild your credit if you are carrying $25,000.00 worth of debt? Many people attempt to consolidate their debt prior to filing for bankruptcy only to find out they have paid thousands of dollars before realizing they need to file bankruptcy because in 99.9% of cases debt consolidation or debt settlement simply does not work.

2. Note that your credit score will increase within the first year after filing for bankruptcy sometimes within just months. After bankruptcy you will want to begin applying for secured credit cards. My clients have advised me that the credit card companies begin soliciting them directly after they complete their bankruptcy. Secured credit cards are nothing more than a pre-paid credit card. This will assist you in rebuilding your credit score. Very often my clients report that they received unsecured credit card offers after completing their case. Either way, just remember to be cautious as many of these credit cards charge annual fees and monthly charges

3. You should open a savings account after filing for bankruptcy and begin saving some money. Remember that you should always pay yourself first. Set an amount to have deposited directly from your paycheck into your savings account each pay period. You need to try to forget you have that account. Some people find it helpful to open an online savings account, as it sometimes is more difficult to dip into the account on a whim.

4. Be sure to pull your credit report regularly. You should pull one free credit report per year from the 3 major credit bureaus. You can do this at annualcreditreport.com. It is recommended that you pull one report every four months so that you are continuously checking your credit reports throughout the year. Be sure to review the credit report very carefully and dispute any information that is incorrect. You can dispute any incorrect information online or through the mail. You should be sure that any debt you had that was listed in the bankruptcy is marked as discharged debt on your credit report once you have completed your bankruptcy.

5. It is possible to buy a car and even a home after filing for bankruptcy. You should initially expect higher interest rates when you apply for credit cards, cars and mortgages. You can qualify for an FHA mortgage two years after bankruptcy discharge, which you receive once your case has completed. The more distance you get from the bankruptcy the better the interest rates you will offered for your consumer purchases. Remember never to take out adjustable rate loans of any kind. Always opt for a fixed interest rate loan whether it is a mortgage, student loan, or a personal loan and never ever cosign for anyone.

6. Always, always pay your bills on time. Paying ahead of due dates can assure you do not forget to pay the bills on time. Be sure that if you pay your bills through your checking account’s online bill pay option that you account for the time it will take for the payment to post.

The most important thing to remember when rebuilding your credit is to be very careful not to fall into the same situation again if you can help it. Try not to fall into the same pattern which may have led to financial difficulties in the first place.

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