Rebuilding Your Credit After Bankruptcy: Secured Credit Card

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After your credit report is accurate you are ready to look for a secured credit card. A secured credit card is a credit card where a balance of money has already been posted. For example, most secured credit cards will require you to put up anywhere between $300 and $500. After doing this, you have a credit limit of the amount that you put up. I know, its not what you are used to in your pre-bankruptcy days but that’s okay. We are in a rebuilding period now.

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What is a Reaffirmation Agreement?

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A reaffirmation agreement is a legally binding document filed with the bankruptcy court in which you agree to keep making payments on a debt. For example, you are required to sign a reaffirmation agreement if you would like to retain personal property, such as an automobile, and keep making payments after filing your bankruptcy.

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Rebuilding Your Credit After Bankruptcy in 6 Steps (Step #1)

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Anyone who tells you that bankruptcy won’t hurt your credit is lying to you. Bankruptcy will hurt your credit initially. However, if you are interested in filing bankruptcy your credit is probably already damaged quite a bit or is well on its way to being damaged. One of the nice things about bankruptcy is it allows you to hit the “refresh” button to start over. The question on whether a bankruptcy will hurt my credit is an easy one to answer. Yes. The more important question we should really be asking is: Can you rebuild your credit after filing bankruptcy and, if so, how? Yes, you can rebuild your credit after filing bankruptcy.

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Can I Buy a Car While I'm in a Chapter 13 Bankruptcy?

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Due to unforeseen circumstances, sometimes a person in a Chapter 13 bankruptcy will need to take out a new loan to get a car. This can happen if, for example, the car that you were driving when you filed the bankruptcy is in an accident or breaks down beyond repair.

You can buy a car while you’re in a Chapter 13 Bankruptcy. However, you must obtain approval from your Chapter 13 Trustee in order to finance a car while you’re bankruptcy. The Chapter 13 Trustee can generally approve a credit request for up to $15,000.00.

It’s important that you contact your attorney so he or she can advise you how to proceed. You will need to find a car you want to purchase and obtain the terms of the loan from the lender/dealership. It will be necessary for your attorney to update your monthly income and expenses prior to submitting the request for credit authorization to the Trustee. You need to be able to show the Trustee that you can afford your Chapter 13 plan payment and a new car payment.

Your attorney will submit a credit authorization request form to the Trustee, with the terms of the loan, including the amount of the loan, the interest rate and the monthly payment. It can take up to ten (10) days for the Trustee to approve the request. Once you have final approval from the Trustee, the car can be purchased.

What If I Get a New Job While I am in Bankruptcy?

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These are common questions that many people have about bankruptcy. In an effort to provide you with information we have provided these frequent questions. However, it is important to realize that each state has different rules and these answers are not meant to be legal advice. Contact a bankruptcy attorney to learn more.

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Why Would the Trustee Increase My Chapter 13 Payments?

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Your payments are usually increased when you have failed to make payments to the Trustee, and the mortgage company increases your house payments due to a change in your interest rate or escrow and/or you have additional claims filed in your bankruptcy. The Trustee may also increase your Plan payment if you fail to pay property insurance. Usually when the Trustee increases your Chapter 13 payments, it is because there is not enough being paid into the Plan to pay all of your secured debts on a monthly basis (house, car, furniture/appliances, etc.). Additional claims may be for taxes you have failed to pay to the city, county, state or Internal Revenue Service after filing your bankruptcy.

What is the General Timeline for a Chapter 13 Bankruptcy?

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This is a general and approximate timeline. Each and every case will be different depending upon your individual situation. Some cases may take less time and others may take more time. To get a more definitive timeline, review the contract you sign with an attorney at Duncan Law at the time of your free initial bankruptcy consultation.

Should I Get a Credit Report Before I File Bankruptcy?

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Although, it’s important to keep statements that you receive in the mail regarding your debts, you should also consider obtaining a credit report.

For many people, it is difficult to remember original creditors, collections agencies, amounts owed, and so on from years past.  A credit report is a great way to visually see all of your debts listed out for you, especially if you did not keep statements.  Our recommendation would be to look at your statements first, then back it up with a credit report.  For many people, this will cover your bases in regards to who you owe, but remember this does not guarantee to be all of your creditors.  This is why it’s important to keep up with your statements and also view your free credit report yearly.  By doing this, it allows you to see whom you owe, if it’s accurate, and when and where the debt was incurred.

You are entitled to a free credit report every 12 months from www.AnnualCreditReport.com. It is one of the only legitimately free places to obtain a credit report. It will not, however, give you your actual credit score. Use this website, if you have not already done so in the past 12 months, to view your debts and names of your creditors.  We recommend checking this annually so you can be sure the creditors on your report are accurate.  When filing bankruptcy, it is essential that all of your creditors are listed, so be sure to use both statements and a credit report to back up what you already know regarding your debt.

It’s also a good idea to be sure you get your free credit report again a few months after you file bankruptcy. It will help you rebuild your credit after bankruptcy.

What is a Dismissal in Bankruptcy?

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The court may dismiss your Chapter 13 bankruptcy if you fail to make payments to the Trustee or if your debts exceed your ability to pay. If your bankruptcy is dismissed by the court you will be responsible for all your debts and the creditors may proceed with collection actions against you as well as proceed with foreclosure and/or repossession.

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What If I Get Behind On My Chapter 13 Bankruptcy Payments?

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Each month the Trustee receives a payment from you, he will distribute payments to your creditors based on a priority as established by the Chapter 13 plan. If you do not make a payment to the Trustee, he will not distribute payments to your creditors.

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