Life after bankruptcy does not remain the same, at least for a while. It is a tough bargain, where you give away your material pleasures for eternal peace of mind. By law, it is required to publish the name of the party going bankrupt in the local newspapers. So, you may have to face a large amount of public embarrassment. On pronouncing bankruptcy, your major assets like house and vehicle will be forfeited. Loans will not be easily available to you and if they are, the interest rates will be higher. Your credit rating will be damaged and it will remain so, for five-six years following bankruptcy.
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How to deal with all this? The key is, to jump back to your normal life as soon as possible after bankruptcy. Anyone can do this, by following a few simple steps and working towards a goal to build a protective layer, so that the ghost of bankruptcy can not haunt you in your daily affairs.
Recreate Your Image
Legally, bankruptcy may reflect on your credit report anywhere from five to ten years after bankruptcy. However, you can start improving your scores from day one. Having learnt from your mistakes, make it a habit to make regular payments on your credit card, only spending a part of your credit limit, that you can easily pay off.
To build your credit score, you must also use credit. You will be surprised to know that soon after your bankruptcy; you will be eligible for loans or credit cards by many financial institutions. These are usually secured loans and may be available on higher interest rates, but taking credit is the only way to build credibility.
Reaffirming Existing Loans
Reaffirming a loan refers to agreeing to pay the balance on a loan by signing a new contract after bankruptcy. This can be done in case of car-loan or credit card dues. This is not only beneficial for the lender, as he gets a chance to recover his debt, but is also seen as a good gesture on your part. This helps a great deal to rebuild your credit score after bankruptcy.
Be Prepared
This is a crucial time, as you are working towards reconstructing the damage done by bankruptcy. It is important that all your payments are timely and complete. But in an emergency, you may again fall off the line. A credit card has the ability to take care of your emergency expenses, without putting burden on your other financial commitments. So, keep your credit card balance available as much as possible.
So, sooner you take controls of financial reins, the better it will be for your credit worthiness. It is utterly important to stay positive during this period and treat the stigma of bankruptcy as a learning experience, rather than an embarrassing episode of your life. With a confident approach and sincere efforts, you will have a normal financial scenario and strong credit soon after bankruptcy.
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