Working With the 2011 Bankruptcy Laws

Since the economic downturn in 2007, bankruptcy filings have increased. In fact, the number of those filing for bankruptcy has approached the total number that filed before the 2005 changes in bankruptcy laws. If you are considering filing for bankruptcy, it is important to plan for life after your filing before you even begin the legal steps. There are 10 important things to consider when looking at the 2011 bankruptcy laws.

First, create a concise explanation of the reasons you have filed for bankruptcy. Over 90% of all people who file do so because of illness, loss of employment, or divorce. Future employers and lenders will wish to know why you need it to file for bankruptcy. It is important that your story is clear and factual. This situation occurred to you, you have taken responsibility, and the proper motions are in place for you to move past it.

Next, check your credit score after you have filed. As your credit score will be at zero, the only way it can go is up. Use your current score to remind you where you do not wish to be in the future, and use that knowledge to help you build it until it is positive.

It is also important to review your current credit report in order to clean up any issues that should be revised or removed. Having a correct credit report will demonstrate to future lenders and employers that you have taken this filing seriously. Make sure all its claims and information and previous addresses are correct.

Fourth, be sure that all creditors covered by the bankruptcy show your status as “discharged in bankruptcy”. After filing, negative history sometimes will appear on your credit report. You must be sure the creditor does not show you are in default on their payments, especially if your car or other property has been surrendered.

Fifth, debts are negative items on your credit report that will eventually be removed. You must know when these removal dates will occur. Accounts have specific lengths of time to be on the credit report. If you have a personal loan or credit card, these can stay on your report for seven years after your last payment date or the last time you use the account. It may help to use a calendar with the dates of each negative mark’s removal on display. These dates mark when your credit score will begin to increase.

For the sixth step, call three separate types of lenders to find out when you’ll begin to qualify for credits for loans with them. These lenders should be a personal loan lender, a car lender, and a credit card lender. Do not apply for credit right away, but it is important to know when these lenders would be willing to talk to you about a new account. Ask how long it will be before you can apply for credit after bankruptcy, how long the approval process will take, their minimum requirement for credit score, whether they use a particular credit bureau or all three, if they will allow you to apply without a cosigner, and if they know of any reputable creditors that will work with debtors who have just filed for bankruptcy.

Step seven may be surprising. You can begin to reestablish your credit line after filing for bankruptcy by applying for a secured credit card. These credit cards are usually pre-secured with cash, usually around $500. Your credit cards limit will be the amount you have prepaid. Be sure the lender has reported that new credit line to the three main credit bureaus. Your credit score will only be improved if all three credit bureaus report it. Lenders will often look at all three scores, so one bad score will lower your two good scores. It is also important to find out when the credit line for your card can be increased and when you will be able to apply for an unsecured credit card. Finding a lender willing to work with you to improve your credit is critical.

Once you have begun to reestablish your credit line, the eighth step is to apply for an unsecured credit card. Although you may start out with a low credit limit, unsecured cards will help improve your credit more quickly. Ask these lenders when you can raise your credit limit.

Although 2011 bankruptcy laws were created to help those who filed help their credit increase more quickly, you will find that focusing on banks and credit unions rather than rent-to-own lenders or finance companies will bring you quicker results for lower rates. These organizations will also help re-establish your credit score and reputation more quickly than smaller institutions.

Finally, remaining positive while dealing with the 2011 bankruptcy laws is very important. Although you will be denied immediate credit after you file for bankruptcy, persevere to reestablish your credit.