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Rebuilding Credit after Filing for Chapter
7 Bankruptcy
Most
people think that they can never establish their
credit after filing bankruptcy but this is simply
not true. People who qualify for Chapter 7 bankruptcy may lose some of their personal
property if they exceed their exemptions BUT after your bankruptcy has been processed and your unsecured
debt removed, you can begin rebuilding your credit simply by staying
current on rent payments.
If you have credit cards
that you did not owe any money on prior to your bankruptcy, avoid
putting charges on them. However, don't cancel them. If you close
out credit card accounts that you don't use, this could adversely
effect your credit score. As your credit score improves over time,
you may be able to qualify for a home loan over the course of a few
years.
How to Read & Correct Your Credit
Report
Your credit report can be your best friend or your worst nightmare
depending on the amount of debt you have, how old your debt is, and your
ability to interpret your credit report.
The FTC set up a website that allows you can get a
free credit report once
a year from all 3 reporting agencies. Smart people pull one
free report from one reporting agency every 4 months so they can stay on top of any
discrepancies because even a small inaccuracy can cause your car
insurance premium to increase along with the interest rate you pay
for credit cards.
What does CHARGE OFF mean?
You still owe the debt. If no payment is received on an
account after 180 days creditors are required by law to charge off the
account to receive their tax write-off.
How does the 7 year clock work?
The 7 year clock begins ticking the moment a debt is incurred.
Every time a payment is made, the clock resets itself. If no payments
are made in 7 years, the
debt
must be removed from your credit report regardless of whether it was charged off, sold, or in collections.
This is the #1
reason why credit reports are inaccurate -
debt purchasers & collection
agencies keep resetting the 7 year clock (known as aging) in
total disregard of the Fair Credit Reporting Act.
Aged accounts must be removed from your credit report!
Creditors, collection agencies, and debt purchasers are required
to validate debts & PROVE a payment was made which which allowed them to reset the 7 year
clock & most can't.
What is Credit Repair?
Credit
repair & credit watching are both scams!
They are designed to gain access to your bank or credit card account because there is no such thing as "instant"
credit repair & you can watch your own credit - it isn't
rocket science.
Don't fall for the "free" credit reports!
The "free" credit reports advertised on tv or internet are NOT
free. They all want you to "sign up" for something that costs
you money & offer merged credit reports that are the most
pitiful excuse for credit reports we've ever seen - nothing but
garbage.
Close your eBay & Paypal accounts!
Neither eBay or Paypal extend credit to their members yet both
randomly pull members credit reports
without written authorization which will
lower your credit score.
eBay Inc. also shares your personal
info with their entire corporate family (all subsidiaries worldwide),
their vendors, etc. etc. etc. thus
substantially increasing your level of risk for identity theft by leaps
& bounds.
Tips to establish good
credit & raise your credit score.
Correct your credit report within one month of receiving your
discharge of debt from the bankruptcy court.
Never co-sign for anything - especially family members.
Never share your bank account with anyone - no exceptions.
Get a secured credit card from a local credit union. They will
require a deposit of anywhere between $300.00 to $500.00 but it's
worth it.
Always pay early &
always pay more than the minimum payment.
Never pay off your credit cards - always keep a small carry over balance to
establish a good payment record.
How to pay off your home in 10 years.
Ask your lender for an amortization schedule which is a schedule
of your house payments broken down by payment number, principle &
interest. Most mortgages are 30 year mortgages and consist of
360 payments
Every month pay your mortgage as usual. Then write a separate
check for your principle payment and write PRINCIPLE ONLY on the
bottom left side of the check.
Why? Every extra principle payment you pay wipes out 3
huge interest payments. This will enable you to pay off your
home in 10 years. |
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