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Vermont Bankruptcy Services

Law Office James Palmisano
417 Barre Street
Montpelier, Vermont 05602
Phone: (800) 585-3169
Phone: (802) 229-4001
Fax: (802) 229-2733

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.:Rebuilding Your Credit:.

After your case is closed, you can begin to rebuild credit. The key to smart money management is to spend less than you make and save the rest. Guide yourself based on the following steps.

Step 1: Control Your Spending
Step 2: Live Within a Budget
Step 3: Rebuild Your Credit

Credit is your ability to borrow money.  Many lenders determine whether or not to lend you money by examining your debt to income ratio; how much outstanding debt you have compared to your income.  Many people filing bankruptcy will pay a percentage point or two higher than a person with unblemished credit, You should be able to finance a home within two years after receiving a bankruptcy discharge, as long as you can provide a minimum down payment and show the ability to make the monthly mortgage payment.  Many consumer debtors receive credit card solicitations within months of receiving a bankruptcy discharge.

While a Chapter 7 filing stays on your credit report for 10 years, it's important to remember that after filing for , you are actually less of a credit risk, since you have very little outstanding debt.  Many creditors may also view you as a prime customer after bankruptcy because they know you cannot file another Chapter 7 case for at least eight years.  But don't be fooled. You still have to rebuild your credit, and it will take time, some hard work and major changes in your lifestyle to do it right

Here are four tips to repairing a damaged credit rating:

  • Apply for a secured credit card. These cards are backed by money that you deposit in a special account, so you don't run the risk of falling behind on payments. They'll make a good impression on your credit report.
  • Ask a trusted friend to co-sign on a small loan, preferably from the bank that holds your checking account. Repayments on the loan will help your credit rating the same way they would if you took the loan out yourself.
  • Open a savings account, if you don't already have one. Try to deposit 5% of your paycheck directly into the account.
  • If you have the means, you should consider getting a car loan or a mortgage. To avoid a higher interest rate, you'll have to provide proof of employment.
 

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