Thomas F. Miles, Attorney and Counselor at Law
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Simple steps to rebuilding credit after personal bankruptcy

In many cases, California consumers who file for bankruptcy are concerned about how that decision will impact their financial futures. Decreased credit scoring is one example of a negative consequence that will follow personal bankruptcy. However, taken in the perspective of the bigger picture, credit scoring is a short-term problem with a clear-cut solution.

Once one’s bankruptcy is complete, the process of rebuilding a strong credit history can begin. The first step is to gather copies of all current credit reports. With this information at hand, consumers can look for any inaccurate or incomplete information and ask that those entries be corrected.

Next, it is important to establish a working budget that includes current income, assets and debt service. By knowing exactly how much money is coming in and going out, it is easier to avoid the same type of financial crisis that led to the need to seek bankruptcy protection. Having a budget in place also gives one the ability to plan for future needs and create an emergency fund.

The best way to make one’s credit scores rise is to make use of secured credit cards. Once a deposit is made to the company that issues a secured card, the account can be used in the same way as a traditional credit card. Be sure to seek cards with favorable terms and conditions, and use the new lines of credit carefully.

With the right mix of effort and determination, California consumers can bounce back from personal bankruptcy in a far lesser timeframe than many imagine. In the process, many can learn great money-management skills, such as monitoring one’s credit report and creating a budget. Once bankruptcy is complete, individuals gain a fresh financial start, which can lead to a brighter future.

Source: USA Today, "Personal Finance: Re-establish credit after bankruptcy", Robert Powell, July 3, 2014

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