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Hi all. I filed BK7 back in August and I just received my discharge letter today. The paralegal who helped me prepare the paperwork said that once the BK is discharged, we'll need to send letters to the credit reporting agencies, I guess to make sure that the reports are accurately showing accounts that were included in the BK.

My question is, what's the first thing I should do in order to start getting my credit back on the right track? Thanks.

Posted: Wed Dec 27, 2006 7:44 pm Subject:

da_mous -

My first word of advice would be not to jump back into any credit situation. Give yourself time to adjust to your new credit standing.

You will quite likely receive a mountain of credit card offers in the mail now that you have been discharged. Don't be tempted by them. These companies are counting on the fact that you might fall back into old habits and immediately start using credit cards and run up a big balance all over again, so they can charge higher interest rates, etc.

Once you have accustomed yourself to your new credit standing, obtain ONE credit card with a low credit limit, and the lowest possible interest rate. Charge one small purchase per month, and pay it off before the due date. If a credit limit increase is offered, accept it, but only within the amount you can comfortably afford to pay off in 30 days.

This will work, if you are disciplined enough to pay the card off every month. If you feel you cannot be disciplined enough to do this, I would definitely recommend staying away from the credit cards.

At some point, you could obtain a small loan from your bank, provided you have a good relationship with them. Make all the payments on time, and you will have a start at rebuilding your credit.

Pay your utilities and phone bill on time. Many phone companies are now reporting their credit experiences with customers to the credit bureaus.

I think the best watchword you can have when re-entering the credit arena is CAUTION.

Hope this information helps. If I have posted anything someone disagrees with, please speak up - I'm only speaking from personal experience, and I definitely don't know all there is to know about credit!

Posted: Wed Dec 27, 2006 8:21 pm Subject:

After my BK was discharged I did receive lots of credit card offers. But, even when I applied I was still turned down for a lot of them. It was probably a good year before I actually got one. My advice is similiar to SueBee's---don't try and jump right back in to the credit thing just yet. Give it some time

Posted: Wed Dec 27, 2006 9:01 pm Subject: bankruptcy

Keep up with your payments. Beware of some of the credit card offers you will get. I only have one card that I use and pay it off every 3 months. I dont like cards with names I dont regonzize. Just do as Sue says and dont jump in to fast and get into trouble again. Best Wishes Kyside38

Posted: Wed Dec 27, 2006 11:11 pm Subject:

Sometimes we miss the forest for the trees. Set up a savings plan and treat yourself as your most important creditor. Try to save 10% of your net. If you can't do that, even $25 per paycheck makes a difference. Start looking into ways to make your extra money grow. Why is it we think our money is there to give to others and why can't we start realizing that we are important enough to ourselves to make sure that money stays with us? Start being frugal ... no, down right stingy with money. Example: I have a brother-in-law worth millions. Last summer we went to visit and on the way home from an outing my son drove with him. He asked my son if he wanted to stop and get a soda from the 7-11. My son pulled into the parking lot and his uncle asked him if he had any money, since he didn't carry cash. We get into debt because of our bad habits. After learning the lesson, we need to find new habits.

Posted: Thu Dec 28, 2006 8:31 am Subject:

I just got my bankruptcy discharge papers about two weeks ago and I've already been getting tons of offers for vehicle financing through all these special programs. Heck I was getting the offers before it was even discharged. I need a new car really bad and I know I just can't go to the lot and pick one out and get financed. I just don't want to get stuck with an outrageous interest rate.

Posted: Thu Dec 28, 2006 8:37 am Subject:

Be careful, Pinklady - it can really get sticky with car loans. Is there any way you can get something inexpensive but reliable when you get your tax refund, until you get more credit under your belt after your bankruptcy? Even if that car only lasts a year or so, it would give you time to start shaping your credit up and then you will be in a better position to negotiate the interest rate when you do go to buy new.

Posted: Thu Dec 28, 2006 2:58 pm Subject:

As a person who filed Chapter 7 in 2000, I know how you feel but here are a few things that you need to know.

1)Contact the credit bureaus and make sure that each have listed which accounts that you have filed for chapter 7.

2) DO NOT TRY TO GET A LOAN FOR ANYTHING!. You are now out of debt so don't try to get back in debt just because you filed straight Chapter 7 and think that you are in financial heaven. You are not. You need to establish credit. The best way to do that is to get a secured credit card. I know that some people would not recommend this because with secured credit cards you are basically using your own money. However with a secure credit card, you can show that you are trying to reestablish credit.

3) Wait two years before you do anything. Most car dealership will offer you a vehicle even if you file bankruptcy but at a much higher rate. Wait at least two years before you do anything. In that case, once your bankrutpcy has been discharged, you may be able to get a loan at much more reasonable rate.

Bankrutpcy is a way out of debt not a way to get back into it. I highly recommend that you be careful with your spending.

Posted: Thu Dec 28, 2006 11:35 pm Subject:

Just to add to my previous post, on your next paycheck take a good look at it and really see whose name is on it. That's your money. Don't be so anxious to give it away by creating debt. Become your own most important creditor and start saving.

Posted: Fri Dec 29, 2006 8:19 am Subject:

That was my biggest problem...saving money. I've tried several savings account, but it's really hard for me to save. Then it seems like everytime I save money, something comes up were I need to spend it..like fixing my car, or an outrageous phone bill. Then my mother told me about this special savings CD at a certain bank that allows you to open it with only $100 and it's locked in for a year. You can deposit money, but you can't withdrawl the money. I'm going to open one this weekend. I will just have to discipline myself to make deposits.

Posted: Fri Dec 29, 2006 9:48 am Subject:

You just said the magic word ... "discipline". Be tough on yourself. Once you start seeing interest grow, you'll find it easier to save.

Posted: Fri Dec 29, 2006 2:26 pm Subject:

Thank you, SueBee and everybody else for all of that wonderful advice. I, too, have gotten tons of letters from 'special finance' departments at car lots as well and from credit card companies. I definitely intend to take it slow and be very careful. Like a lot of people, the most difficult thing for me to do is save money! I've tried savings accounts, but the money to is too easily accessible. I think I'm going to start contributing to my companies 401K plan. That way, the money is taken before I see it and I can't get to it so easily.

So, first tings first. Pull my credit reports and send letters to the bureaus. Ahh, fun times Smile

Posted: Fri Dec 29, 2006 3:39 pm Subject:

da_mous -

You're well on your way! Here are a few small savings ideas:

-if your employer will split your direct deposit a couple of different ways, see if you can have some put into a savings account at a bank that is very inconvenient for you to get to. You won't see the money before it gets into your hands, and it won't be so easy for you to get to the money in the account. You might even "forget" you have it after a while.

-Got a piggy bank? Use it! Loose change has been my saving grace many a time when I was short on money. I routinely put my spare change into a piggy bank and forget about it. I have had up to $20 in there at times, which can mean the difference between having gas in the car and not. This way, you are not touching your savings at the bank - once you start breaking into that savings at the bank, it's too easy to continue.

Posted: Fri Dec 29, 2006 4:45 pm Subject:

Try opening a savings account with an online bank like Bank of America or CitiBank. You can still get to your money by transferring, but it takes a couple of days to get it transferred to the account you use daily. Knowing that would be a way of determining whether you really need the money and help you to save.

Look carefully at 401(k) plans. They aren't holding up as well as before and there are huge penalties for accessing the money before you are ready to retire. If it is retirement money, expect to pay taxes when you retire. If you want rainy day money, find an account that is less accessible but still available to you like the banks I mentioned. Also, a technique I use to accumulate cash without having cash is to put it on a cash card. I have seven of them designated for various uses like emergency medical or dental work costs that are beyond what's in my cafeteria plan. I have a dog and you never know when you might have to take them to the vet, so I have a cash card for the vet (just in case). Interest doesn't grow on them, but for now this is how I am accumulating the money yet avoiding the temptation to spend the cash. I lock the cards away in a box in a drawer in my bedroom and only pull them out to add cash to them. I don't have a lot on any of the cards at this time, but in time I will.
__________________________
"There is only one success - to be able to spend your life in your own way." ~ Christopher Morley

Posted: Sat Dec 30, 2006 6:25 pm Subject:

Discipline. That is the main word. Discipline. Decide on what you need and what you don't need.

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Just got my BK7 Discharge letter... Now what?

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