100 Tips for 2011 » 10 bankruptcy moves in 2011
There has been a steady stream of bankruptcy filings during the economic downturn, and we can realistically expect 2011 to be no different. Look for another 1.5 million people to file for bankruptcy in 2011.
- Create your story
- Review credit score after filing
- Review your credit report
- Show “discharged in bankruptcy
- Know when debts can be removed
- Begin to interview lenders
- Apply for a secured credit card
- Apply for an unsecured credit card
- Focus on banks and credit unions
- Remain positive through bankruptcy
Since the mortgage crisis began in 2007, the number of people filing for bankruptcy protection has started to approach the total number before bankruptcy laws changed in 2005.
If you are contemplating bankruptcy, you can also plan for life after bankruptcy even before you even decide to file. That is not to say you ought to plan a bankruptcy filing, but you can plan to have good credit again in the event you do file.
Here are 10 things to think about when you’re considering bankruptcy.
Each debt is a negative item on your credit report that can be removed eventually. You need to know when that date will arrive. Each type of account has a length of time it will be on your credit report. It might only be for a few years. For example, a credit card or personal loan account will stay on your report for seven years from the date of last payment or last use of that account.
But you want to set up dates on a calendar to know exactly when a negative mark is ready to be wiped off your record. That’s when the positive marks start to stand out and start to help your credit score. The further you get from the original date of the negative mark, the less impact it has on your credit score.
You will want to call three lenders — a car lender, a personal loan lender or a credit card lender. You will want to know the credit guidelines required to qualify for a loan or credit with them. You do not want to apply for credit yet, but you do want to know whether that particular lender is one that you can or cannot contact when the time comes.
You should ask:
- Can I be approved for credit even though I filed bankruptcy?
- How long after I file can I be approved?
- What is your minimum credit score requirement?
- Do you review all three credit bureaus or just one particular bureau?
- Can I be approved for credit without a co-signer?
- Do you know of any other reputable creditors that work with people who just filed bankruptcy?
This is one great way to re-establish a post-bankruptcy filing credit line. You will give the bank or credit union some money, usually $500. In exchange, you will get a credit card with a matching credit limit. Make sure the lender reports this new credit line to all three credit bureaus.
You want all three bureaus to show post-bankruptcy payment history. You don’t want to get a secured credit card, have it report to only one major agency and then be denied for credit because a particular lender does not look at that particular credit bureau report.
You need all three bureau’s credit scores to improve after bankruptcy. Many lenders look at a “blended” score of all three bureaus. One bad credit score can bring down two better scores and disqualify you for a loan.
Also, find out when you will be able to increase the card’s credit line and when you can receive an unsecured credit card. Try to choose a lender who will work with you to improve your credit.
Eleanor Roosevelt once said, “No one can make you feel inferior without your consent.” You will be denied credit as you start your recovery from bankruptcy. But you must remain positive. Don’t let a few rejections keep you from the ultimate goal of re-established credit.