Bankruptcy and CREDIT!

RPC Nation!!! Seems to be a lot of confusion about how long or what happens to your credit when you file for bankruptcy. There is a lot of information out there that scares people and I have found articles that are misleading. I'm going to lay out some things that will be rule of thumb and again most of what I talk about relates to FICO. Remember FICO is the worlds largest and most trusted when it comes to credit score. Here we GO! You filed chapter 7 bankruptcy or maybe your thinking of filing bankruptcy, either way you want to know what's going to happen and what does it all mean. When you file for bankruptcy it doesn't mean you can't get credit for 7 years, I say 7 years because that seems to be the myth number I hear every week. Let's get rid of that "7" years number for now and forget it. DID YOU KNOW? ***You can usually qualify to buy a car right after your bankruptcy is discharged, that can be a key in helping you re-establish credit. DID YOU KNOW? ***You can usually get an unsecured credit card after your bankruptcy is discharged, however if you included Citibank in your BK I don't suggest trying to get a card with them again. I have one more did you know: You can buy a new home 2 years after your chapter 7 bankruptcy is discharged! If you included a home in your bankruptcy then you'll have to wait 3 years. FHA will allow you to do this, which is exciting and a lot of people think you have to wait "7" years. However, I am not a lender and you need to check with your lender for specific guidelines. I can tell you that I help many clients that have a bankruptcy and they become homeowners within 2-3 years after their discharge date. You have to make sure you have re-established credit, make sure your items inside your bankruptcy are reporting to your credit correctly and don't have any more negatives after your bankruptcy = behave with your debts! My last statement is the sometimes the most difficult part of the scare and what keeps people from filing or makes them give up after they file. ****CREDIT ITEMS AND HOW THEY REPORT IN YOUR BANKRUPTCY**** what does that mean? What I've found is when someone files bankruptcy they will still have credit items report negatively on their credit. ***EXAMPLE: You file and Wells Fargo is included in your bankruptcy- however for some reason they have reported you as a charge off, profit and loss, maybe you still show a past due or a balance. The dating of this negative activity is after your bankruptcy date. This negative reporting after a bankruptcy is what keeps your score in the 500's for years after you file. Negative reporting after a BK, think of it like this: You just had a mild heart attack (BK not life ending) you've recovered from the heart attack, going back to work things seem okay and you break your leg! You can still work and function but it sucks, takes longer to get better and people can't really depend on you because something always happens with your health. That's negative reporting after a bankruptcy (bk) and it can be corrected. ***RE-ESTABLISH YOUR CREDIT*** You just filed, so you don't want to get a whole bunch of debt. Well my friends, cash is KING and credit is QUEEN! If you don't have one, you better have the other and you just filed BK so you don't really have either. Time to get some credit! If you absolutely have to, get a pre-paid credit card at your bank, they don't really work that well anymore so its a last resort. There are credit cards for you, maybe buy a car if you need one. Talk to a credit union, they are usually a good option for people and are more willing to work with you. It might take a little time as well, maybe you add one credit item and then a few months later you add a second. You need to get minimum of two lines of credit and I always suggest three. That will help you the most and the fastest, just don't make all three lines credit cards. Your bankruptcy will remain on your credit for 10 years, the items inside your bankruptcy will remain for 7 years. (dating is 6 months from the date of first derogatory plus 7 years) So if you went delinquent 2 years prior to BK, that's your dating for that item. *****PLEASE, PLEASE, PLEASE CHECK YOUR CREDIT!!! When you check your credit, look at dating, dating, dating. Look at late payment dates, charge off dates, look at balances, its how these items report in relation to your bankruptcy that can make all the difference. If something is reporting wrong, its not the fault of your attorney. They have no control over that, and often times don't know how to correct it. Not always, but in most cases they don't have the time. Fix it yourself or call me, the FCRA allows you to do either. If you're considering bankruptcy reach out to my friends at Lamey Law, Anderson and Associates and Drewes Law. If you're wondering if you file and what that means when buying a home, ask a lender. I work with some of the best, so if you need someone, let me know. If you've filed and need help please reach out to me, I'm always around.... www.redphoenixco.com john@redphoenixco.com