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Filing for bankruptcy, while often a good idea, is usually considered "financial suicide". In fact, a lot of people believe that bankruptcy will lead to 7 years of bad credit and embarrassment. Some even think that they'll never be able to buy on credit again. These warnings are FALSE. The truth is, if your bankruptcy is discharged, re-establishing credit can be done in as little as twelve months. As long as you know how the US credit system works, you can restore your credit quickly and painlessly. 1. Make a plan. Come up with a budget and a savings plan. You need to figure out how you're going to save. Also, make sure all of your old creditors know that you no longer owe them money. If they send you a collection notice, take care of it right away. Finally, reflect on what caused you to file bankruptcy in the first place and make sure you don't repeat the same mistakes. 2. Start hoarding cash and saving paperwork. While saving a couple of months salary is probably the hardest part of the process, you need to have an emergency cash fund. Besides, you'll need cash for a down payment and secured credit cards. You also need to save all of your important financial documents like pay stubs, bank statements, and bankruptcy documents. Keep them in a safe place because you’ll need them to show creditors in the future. 3. Apply for a secured credit card. Once you're able to save up a little bit of cash it's time to get a secured credit card. Secured credit cards are credit cards secured by a cash deposit, with the amount of your deposit being the amount of available credit. The key to these cards is to use them only once and then destroy them. When your first bill comes, pay the card in full. By doing this you'll trick the credit reporting agencies into giving you credit for making payments in full every month, even though you've only used the card once. By destroying the card, you make sure your balance stays at zero. 4. Buy a car. I know that the idea of buying a cheap used car (2-4 years old, less than $10k) may not get your motor running, but remember the goal here is to re-establish quickly. You want to make a few payments on this car (6 to 12) and then trade it in for something nicer. Just make sure you have a down payment before you go shopping. 5. Get more credit. Now that you have a secured credit card and a car loan that you've been making payments on, you have enough credit to get some low limit national credit cards (like Discover, Visa, MasterCard). Make certain that the cards you apply for do not have an annual fee, and you should also look into getting a credit card from your local credit union. Whatever you do, remember that if your application is denied you need to call and ask WHY. Often times you can convince a credit card company to approve a declined application with a little persistence. 6. You can now get the car you want. The goal — you can now get the car you want after your bankruptcy. If you’ve followed all of the previous steps, you will have a good credit history AND a good credit score. Buying the car, truck, or SUV you want is now firmly in your grasp. With all of these steps, it’s important to remember a couple of things. First, save money every month. Saving money is a life skill that everyone should have. Second, remember what caused your bankruptcy and don’t let it happen again. Use a budget, avoid impulse purchases, and make sure that you can pay all of your bills even if a major catastrophe occurs.
Article Source: http://www.financemanual.com
About the author: Jason Lancaster has nearly 10 years of experience in the auto industry. He's helped hundreds of people get a car loan after bankruptcy and knows how the credit system works for bankruptcy car loans. This article is available as a unique content article with free reprint rights.
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