How to Rebuild Your Credit After Bankruptcy in Indiana
One of the benefits of filing for bankruptcy is that you can have a fresh start from debt, and you can get your life back and under control. The path to rebuilding your credit after bankruptcy in Indiana may seem like a long road. But by staying focused and taking small steps each month, you will soon be on the right track to rebuilding your credit and increasing your credit score.
Rebuilding your credit with Chapter 7 and Chapter 13 Bankruptcy
When you have filed for bankruptcy in Indiana, Chapter 7 can stay on your credit for ten years, and Chapter 13 bankruptcy for seven years. However, with both chapter 7 and chapter 13 bankruptcy, you will have some benefits immediately.
- Under Chapter 7, your non-exempt assets are liquidated to help pay off your debts, reducing your monthly payments to make your payment more manageable.
- Under Chapter 13 bankruptcy, your debts will be consolidated into a bankruptcy trust, and a plan will be created to help you make monthly payments to that trust.
- By staying on top of your bankruptcy payments and following your bankruptcy plan, you will start to rebuild your credit immediately.
An experienced Indiana bankruptcy attorney will be able to put a plan together for you that will give you the tools to recover from bankruptcy and improve your credit score more quickly. In the interim, there are other things that you can start doing right away to improve your credit.
Tips for rebuilding your credit after bankruptcy in Indiana
Monitor your credit report
One of the first things you should do after bankruptcy is to sign up to receive your monthly credit report. This is something you should monitor each month. Understanding how your credit score is reported to all three top credit bureaus is also important. You should also be able to look out for any red flags, anything that was misreported to your credit, or changes to your report.
Focus on your monthly payments
Good financial habits are a huge part of recovering from bankruptcy. One of the most important things you will need to do is make all your monthly payments on time. This includes all your monthly bills, not just your bankruptcy payment plan.
Apply for a secured credit card
Rebuilding your credit score is working towards re-establishing good credit. One option is to get a secured credit card. You must work with your bank or credit union to receive a secured credit card. A secured credit card works like a traditional credit card, but you give the bank the full amount on the secured credit card upfront. This is similar to a deposit. For example, if you got a secured credit card for $500, you would give the bank or credit union the $500 upfront.
When opening a secured credit card, you should be aware of the following;
- Understand the upfront fees
- Make sure the secured card you apply for reports to the credit agencies
- Use this credit card to make small charges and always pay in full and on-time
- Find out if your secured card could eventually turn into a traditional credit card
Sign up for a traditional credit card or unsecured credit card
You may be surprised to find out that credit card companies will send you offers for traditional credit cards. If you are interested in using a traditional credit card after your bankruptcy, it is best to consider the following;
- Consult with your bankruptcy attorney to see if this would be a smart choice as part of rebuilding your credit and following your bankruptcy plan.
- Make sure the credit card has a low credit limit that would be easy for you to manage.
- Because of your bankruptcy, a new traditional card will likely have high fees. Make sure you can pay off the credit card in full each month to avoid these fees and lead you down a path of increasing your debt again.
It might also be a better option to ask if a family member would be open to adding you as a user on their credit card. You could make the monthly payments, and these on-time payments would be reported to the credit agencies.
Take out a small loan.
Talk to your bank or credit union about your options for applying for a small loan that you can repay over time with manageable monthly payments. You can also consider getting a car loan; however, you need to be aware of the high-interest rates.
How to create healthy financial habits
Part of reestablishing your credit is working towards creating healthy financial habits. As you work toward building back your credit, consider following these recommendations.
- Make consistent, on-time monthly payments.
- Build an emergency savings fund
- Only use your credit card for necessary purchases; and if you have the cash to pay it back.
- Your credit card should have a low credit limit
- Don’t apply for store credit cards
- Take your time, and don’t be discouraged
Get your life back and let our law firm help you file for bankruptcy
At Rowdy G. Williams Law Firm, we are committed to ensuring that our clients can overcome the difficult legal obstacles they may not be prepared to face without help. Your case is our case.
If you are faced with bankruptcy, contact us for a free consultation or call us at 812-232-7400. Our experienced bankruptcy attorneys in Terre Haute are here to listen and provide you with the support and guidance you need.