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Putting Consumer Bankruptcy in Your Rearview Mirror


The Bankruptcy Code gives distressed debtors a fresh financial start. Truth be told, some people squander their second chances. They repeat the same mistakes, so they are back in dire straits shortly after their existing debts are discharged. Other people move on to success. Henry Ford is a lingering example. His first automobile manufacturing company went bankrupt. But he learned from his mistakes, and his next company did considerably better. Other post-bankruptcy success stories include Walt Disney, Milton Hershey, Abraham Lincoln, and Donald Trump (although the Trump bankruptcies were not personal bankruptcies).

At Bentz Holguin, we want you to have the tools you need to make the most of your fresh start. Knowledge may be the most important tool of all.

Build a Secured Debt Reserve

On-time home mortgage, auto loan, and other secured debt payments is probably the fastest way to rebuild your credit score. So, it’s very important to stay current on these obligations after bankruptcy. As outlined below, most creditors really only care about the last three or six months. What happened before then does not matter as much.

Keeping current may not be enough. Add an extra 5 or 10 percent to each monthly installment payment. In about a year, those few extra dollars every month may amount to an extra monthly installment payment.

You will not miss the extra money, and the resulting reserve has a number of positive impacts. A reserve allows you to pay off the loan early. That could shave thousands of dollars off your interest payments. Additionally, when another financial storm hits, like a job loss, you are prepared.

A reserve may allow you to unilaterally skip a payment. Alternatively, if you have a good payment history, the moneylender may be willing to defer a payment to the end of the loan. Your bankruptcy attorney may be able to help you negotiate with the moneylender in these cases. At any rate, you definitely have the advantage.

Get a Credit Card

It may seem unusual for a debt relief law firm to advise people to go into debt. But that’s exactly what we are doing. A stable credit history is another good way to rebuild your credit score. So, you’ll need to borrow money. But, you’ll need to do so responsibly.

Many people get secured credit cards with credit limits under $1,000. Shop around for the best post-bankruptcy credit card. It should be one that does not include the notation “secured account” on your FICO report.

Once you obtain the card, charge something on it every month, and pay the bill on time every month. These transactions will improve your credit score. Furthermore, the financial discipline should be beneficial in other areas as well.

Be Patient

Typically, bankruptcy is a slow fade. Usually, people do not become distressed debtors overnight. If it took awhile for your credit score to fall, it will take awhile to rebuild it as well. Look for small victories, like a five-point improvement, and celebrate these milestones with your family.

Be patient during the process as well. If you need to buy a new car or borrow money another way, many lenders may reject you because of your credit history. But many other lenders are willing to work with people like you. If Lender A doesn’t want your business, there is always Lenders B through Z.

Contact Diligent Lawyers

Bankruptcy gives you the fresh financial start that you deserve. For a free consultation with an experienced Chicago debt attorney, contact the Bentz Holguin Law Firm, LLC. Home and after-hours visits are available.

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