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Bankruptcy: After Bankruptcy |
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More Ask Susan |
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Five years ago I declared bankruptcy. I didn't know it would turn out to be such a mistake! Since that time I have purchased nothing on credit.
I need a new vehicle and I am tired of paying rent on a home. I could really use some limited credit purchases.
Is there a way to obtain some limited credit for these types of items? Could you direct me to a source? -Laura
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Laura,
There are plenty of lenders out there that will finance someone with a bankruptcy. A quick search on the Internet will result in hundreds of potential lenders. Keep in mind that lenders make credit decisions based on a number of factors, not just whether or not you’ve filed for bankruptcy.
Because you have not used credit for many years, you may want to begin building a good credit rating by starting small. A secured credit card is easy to obtain and can help you to establish yourself as credit worthy.
Please be aware that you may have to pay high interest rates because of your past credit history. Be sure to read and understand all of the terms and conditions of any new loan.
Good Luck,
The Advice Team |
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I am recovering from a past bankruptcy. Since then I feel I have been punished by having to pay almost 25 percent for my first post bankruptcy car loan. I traded that car in and got a lower rate which is now almost 17 percent. It makes it hard to ever get good credit terms. What can I do? -Mary |
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Mary,
I understand your frustration. Bankruptcy has many side effects and unfortunately many consumers do not understand the full impact until it’s too late.
A bankruptcy stays on your credit report for up to ten years and will continue to affect your ability to obtain favorable credit terms until that time. Think of it from a creditor’s perspective. They need to determine what kind of risk they are taking when lending you money. When someone has filed for bankruptcy, they are considered a greater risk and are therefore often charged higher rates.
On the bright side, a bankruptcy’s negative effects will lessen as the bankruptcy ages and you continue to use credit wisely.
The Advice Team |
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I filed Chapter 13 bankruptcy five years ago. I have since paid the required payments in my settlement which ended in September. I have tried to apply for a credit card and been turned down. I pay the balance on my wife’s credit card (I have a card with my name on it) and am the sole user of the card. My question is how long does it take for financial institutions to realize that I have learned my lesson? What can I do? -Jimmy |
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Jimmy,
A Chapter 13 bankruptcy will continue to negatively impact your “credit worthiness” for up to seven years. Lenders try to judge “credit worthiness” when determining whether or not to loan someone money.
The good news is that your credit report is improving each month as your bankruptcy ages and you continue to use credit wisely.
For now, consider applying for a secured credit card, they are often easier to obtain. Be sure to make all payments on time and as agreed!
Good Luck,
The Advice Team
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More than nine years ago, I filed for Chapter 7 Bankruptcy. My question is how can I get this off my credit history once I hit the ten year period? Can I hire your services to do this? Please let me know. Thank you. -Jose |
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Dear Jose,
To get the bankruptcy off your credit history, all you have to do is wait. The Fair Credit Reporting Act dictates that a bankruptcy stay on your credit report for up to ten years. When the ten years is up (and yours almost is), the bankruptcy notation should come off the report automatically. To verify that this has been done, you may want to pull a copy of your credit report. MMI recommends that you review a copy of your report annually anyway.
One last note: You never should have to hire anyone to help with credit reporting issues. Be wary of companies that try to sell you credit repair services!
The Advice Team
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Please, I would like to know the specific percentages of your income that should go to housing, clothing, groceries, entertainment, medical, savings and whatever else I have left out? I just filed bankruptcy and don't want to make the same mistakes again! -Vicki |
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Vicki,
One of the guidelines MMI uses in advising people on "what to do with your money" is a formula we outline as: 70+20+10=100.
Translated, that means of your net income, no more than 70 percent should go towards living expenses. These expenses are for such items as house payment, food, utilities, etc. No more than 20 percent of your income should go to your creditors. These credit payments would include vehicle payments and credit card payments. The remaining 10 percent of your income should go towards savings, investments and to cover emergency expenses. If you follow this 70+20+10 formula, you will be practicing sound financial money management.
Good luck,
The Advice Team |
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