How to Rebuild Credit After Bankruptcy | Paducah, Kentucky

How to Rebuild Credit After Bankruptcy

Rebuilding Credit After Bankruptcy in Paducah, KY

If you are unable to pay your debts but still want to start over financially, filing for bankruptcy is a process that provides you with a legal means of doing so. The bankruptcy court will decide how your creditors will be paid, and depending on the type of bankruptcy you file, it may also collect and sell your assets and belongings or create a repayment plan for you to follow.

Serving Bankruptcy Clients in Kentucky

At Farmer & Wright PLLC, we serve offices in Paducah, Hopkinsville, Louisville,  Elizabethtown, and Bowling Green, we are bankruptcy attorneys who assist clients in overcoming challenging financial burdens and emancipating themselves from challenging financial obligations. 

If you are in doubt about how to rebuild credit after bankruptcy or if it is possible in the first place. Get in touch with one of our bankruptcy attorneys as soon as possible can in order to obtain legal advice in rebuilding your credit. We have a lot of years of experience helping people get out of difficult financial situations, and we will be able to help you as well if you let us. 

Why Do I Need a Bankruptcy Attorney to Rebuild My Credit in Kentucky?

how to rebuild credit after bankruptcyFiling for bankruptcy without a lawyer is comparable to performing your own surgery. You could attempt, but it is not recommended. The law permits you to file for bankruptcy without an attorney, but doing so can have severe negative consequences for your bankruptcy case, your finances, your family, and your life. If you are contemplating bankruptcy or have questions about bankruptcy, our bankruptcy attorneys can provide you with the information you require.

As your guide through the bankruptcy procedure, a lawyer can offer the following advice:

  • Whether or not to declare bankruptcy
  • What type of bankruptcy must be submitted?
  • How the insolvency procedure operates
  • Which court-issued forms must be filled out?
  • Which obligations qualify for reduction or cancellation?
  • Whether you will be able to keep your home, vehicle, and other property after the bankruptcy case is resolved.

Generally speaking, a bankruptcy attorney can point you in the right legal direction. If you handle your bankruptcy case on your own, you run the risk of making legal errors with long-term financial repercussions.

Tips on Rebuilding Your Credit After Bankruptcy in Paducah, KY

Insolvency is a difficult legal process that can have a devastating effect on your credit score. The good news is, however severe the damage to your credit, it will not last forever.

A bankruptcy will remain on your credit report for seven to ten years, but its impact will diminish over time. In the interim, you can begin improving your credit immediately by taking proactive measures.

  • Maintain payments on non-bankruptcy accounts

Determine, after filing for bankruptcy, which accounts were not closed. There is typically some remaining debt, such as student loans or alimony payments, after filing for bankruptcy.

Rebuild your credit after bankruptcy by making on-time and complete payments. Making consistent payments is essential to establishing credit. In addition, a lower credit utilization ratio is preferable.

  • Avoid job hopping

Although job-hopping has no direct impact on your credit score, it can influence lenders. They want to ensure that you have a stable income and will be able to repay any loan you receive.

A lender evaluates your application for new credit or a loan based on various factors, including your income, employment history over the past 24 months, credit score, and other factors. Even after bankruptcy, having a stable job increases the lender’s confidence in your ability to repay your loan.

  • Request new credit

Obtaining new credit after a Chapter 13 or Chapter 7 bankruptcy is typically difficult. Interest rates and fees may be higher, and approval may be more difficult.

However, it is imperative that you obtain new credit after bankruptcy to demonstrate that you are a responsible borrower. As previously mentioned, establishing a history of on-time payments can provide you with the means to begin seeing your credit score improve. Ensure that any new credit line is reported to the three major credit bureaus: Experian, TransUnion, and Equifax.

  • Consider obtaining a cosigner or Authorized User

After bankruptcy, having a cosigner on loan or lease can increase your chances of approval. A cosigner serves as your legal financial backer if you fail to make payments. When you have a cosigner, credit is still approved in your name. Still, making payments on these accounts can help you improve your credit score.

Your Turn to Become the Authorized User

Additionally, you can become an authorized user on another person’s credit card. Ask a relative or close friend to add you to their credit card account. If the credit card issuer reports payments to the credit bureaus, payments should appear on both your credit report and theirs.

  • Be prudent when requesting new credit

Each application for credit results in a hard inquiry on your credit report. Too many hard inquiries in a short time can negatively impact your credit score, as lenders view this as risky behavior.

If you are frequently denied for new credit cards, it may be because their requirements are too stringent for your current credit profile. Keep an eye on your credit score and be aware of the underwriting standards of issuers in order to apply for credit more intelligently.

Better credit history

Additionally, you can apply for a secured credit card or become an authorized user. You can also enroll in a service that will report your rent payments to the credit bureaus. Over time, your chances of being approved for credit cards with stricter requirements will improve if you have a better credit history.

  • Maintain payments on new credit cards

The most significant factor in determining your credit score is your payment history. Once you have new credit, on-time payments are crucial, especially after a bankruptcy.

  • Permit reporting of your payments to the credit bureaus

Ask creditors and lenders if they report your activity to the bureaus, as they are not required to do so. Any lender or creditor with whom you work after bankruptcy should ideally report to all three bureaus, so that your positive activity is recorded and your credit score is boosted.

Even non-credit-related payments (such as rent and utilities) can be reported to the bureaus. Not all credit scoring models include these payments when calculating your score, but having this alternative credit information in your credit history won’t hurt.

  • Keep your account balances low

When your credit card balance is low, it indicates that you are using a smaller proportion of your available credit. A credit utilization ratio of less than 30 percent is recommended by experts. A low credit utilization ratio is one indicator to lenders that you will repay your debts.

  • Check your credit report to ensure that your bankruptcy is recorded accurately

Credit is severely harmed by bankruptcy, but errors can make the damage worse. For instance, debts listed as active or delinquent instead of discharged may negatively impact credit reports.

After bankruptcy, be sure to review your free credit reports. Immediately contest an error if you discover it. Farmer & Wright PLLC can assist you in removing bankruptcy-related marks from your credit report.

Take note of unfair credit reporting!

Numerous consumers observe instances of inaccurate and even unfair credit reporting. Be aware that your previous bankruptcy should no longer appear on your credit report after seven (Chapter 13) or ten (Chapter 7) years have passed.

Call our Attorneys to Learn How to Rebuild Credit After Bankruptcy in Paducah, KY Now!

Got bankruptcy concerns? Want to start fresh but don’t know how to rebuild credit after bankruptcy? With bankruptcy lawyers at Farmer & Wright, PLLC, we help this be possible.

We help individuals and small businesses obtain relief from their financial burdens through chapter 7, chapter 11, and chapter 13 bankruptcy. Schedule an initial consultation with Farmer & Wright, PLLC, to learn how you can rebuild your credit after a bankruptcy in Paducah today!

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