Martin Pelmore, Bankrupcy Tips - Work On Rebuilding Your Credit - Part #2

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Fri Jan 4 02:49:08 PST 2008


Martin Pelmore, Bankrupcy Tips - Work On Rebuilding Your Credit - Part #2


Ah yes, the 800-pound gorilla that you would have to take on ? rebuilding
your credit. Fortunately for you, filing for bankruptcy does not have quite
the same social and financial stigma it once did ten, maybe twenty years
ago. 'The purpose of filing is a safety valve,? says Roger M. Whelan,
resident scholar of the American Bankruptcy Institute, a nonprofit
professional organization. 'Thank God, the day in which it was like wearing
a blazing star on your forehead is over.'

But rebuilding your credit is the double-edged sword of post-bankrupcy life.
You have gotten to where you are now because you mismanaged your credit.
However, this does not mean that you would have to steer clear from credit
from now on. At first, you may have to, because you are given little choice
on the matter. But sooner or later, you find that you have to get credit to
rebuild your financial life.

So what are the rules? There are no rules; that?s the best part about it. It
does not matter how you do it or how fast. The factors can vary widely from
the kind of resources you have and the type of bankruptcy you filed for. For
instance, if you filed under a Chapter 13 bankruptcy, the bankruptcy will
stay in your credit for five to seven years. Whereas, if you filed under
Chapter 7, the bankruptcy could stay longer in your credit report ? say, up
to ten years. During that period, it is going to be very, very difficult for
you to get credit, let alone work on rebuilding yours from bad to good. And
yet, rebuild you must, if you want to get back in the financial game.

Now, if you have a high dollar income, then obviously you are going to have
a slightly better edge over the rest. But just slightly. If you managed to
hang onto your house, paying your mortgage on time will improve your credit
report. But remember that 'many apartments don?t report to credit bureaus,
so those payments will keep a roof over your head but won?t help you rebuild
your credit,' warns John Ulzheimer, business development manager for
MyFico.com, a division of Fair Isaac Corp., the company that developed
credit scoring.

Ironically enough, while Chapter 7 filers usually have a hard time getting
approved for new credit, they are also usually the ones that have a better
chance at rebuilding their credit. Henry Sommer, an attorney and author of
'Consumer Bankruptcy: The Complete Guide to Chapter 7 and Chapter 13
Personal Bankrupcy' says that 'while you?re in a Chapter 13
(reorganization), your options are somewhat limited in terms of credit.'
That?s because you cannot really apply for new credit without getting the
court?s permission first.

On the other hand, under a Chapter 7, you are given more freedom in that
area since all your debts are discharged. The sooner your debts are
discharged, the sooner you can get to working on repairing your credit.

Bankruptcy Tips #2: Adopt a Positive Attitude and Show What You have Learned


Experts on bankruptcy insist that attitude and persistence can make a
difference on your life after filing for a Chapter 7 or Chapter 13. 'The
consumer who?s going to recover faster is the consumer who jumps back in,'
says Ulzheimer. 'Financial capacity is one thing,' says Tahira K. Hira, a
professor at Iowa State University who specializes in consumer economics and
family finance. 'Mental or attitudinal capacity is the other thing.'

So being positive can make a whole world of difference. '...If you build a
savings account, carry no debts and have an emergency fund, you?re saying,
?Look, I can control my behavior,' Hira adds. 'It depends on how good a
salesperson you are and how good your behavior has been.' And, of course, by
behavior, she means your financial behavior or how you carry yourself around
expenses and financial obligations. 'Pay your bills on time' is the name of
the game. It is also incidentally the easiest way to show to your lenders
that you have learned from your past financial mistake and are making every
effort never to fall into that trap again. In short, you?ve got to be a
model citizen in terms of financial management. Can you handle it? Of
course, you can! And the only rule to follow is this: Shop for lenders.

'There will be a price attached,' warns Hira, 'which is higher interest.'
This gives you all the more reason to be discriminating when choosing
lenders. Don?t just jump at the first credit opportunity thrown your way
only to find that the interests are punishing. Don?t get hard-balled into
paying for high interest rates when you can get virtually the same loan for
lower interest. Compare lenders. You are the consumer and you still have the
advantage of choice.

 Jim Howlsinky offers free Banrkuptcy advice. For more information,
articles, and free reports please visit Bankrupcy Law website:


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