The decision to file for bankruptcy is one that can have a profound effect on your life — a financial fresh start, free from uncontrollable debt, angry creditors and stress.

Bankruptcy gives you the chance to rebuild your credit. After your debts are discharged in bankruptcy, you can begin saving money, instead of putting it toward high-interest credit cards. Here are some tips to make the most of your life after bankruptcy.

Finding a Rental Property

There are plenty of places willing to give you a second chance. How do you find the ones willing to work with you?

• Don’t try to hide your bankruptcy. Make a good first impression on landlords and then explain your credit problems.
• How you are dressed has a big impact on how an individual landlord will view you. Dress nicely when you meet them in person.
• Make your case. Explain what you’ve learned from your bankruptcy. Now that you’ve come clean about your past, explain what happened without making excuses. Of course, actions speak much louder than words, so bring evidence: pay stubs, bank statements, savings account statements, even your budget.

Buying a Home

If you have a recent bankruptcy on your credit and are looking to get financing for a home, there is hope. Buying a home with bad credit will just put more emphasis on the other two factors needed to get a mortgage loan, which are; income verification and a down payment.

• After bankruptcy most lenders want you to wait at least 2 years from the time of the bankruptcy discharge before they will consider you for a mortgage loan. After the two year waiting period is over, you should be able to get financing. You can usually achieve this as long as at least most of your payments have been reported to the credit bureau as having been paid on time since the discharge of your bankruptcy.
• If you are looking to get a mortgage loan after bankruptcy sooner than the 2 years from the time of discharge, you will need to have almost flawless payment history since your bankruptcy discharge. Also, you may need to have a down payment. If you have even 3-5% to use as a down payment, that may be enough to help you get approved.

Rebuilding Your Credit

Minimize the impact of the bankruptcy by immediately working to build your credit.

• Get a secured credit card - This works for a person who has filed bankruptcy just as well as it does for a person trying to establish credit. A secured card is a credit card in which the card holder places a collateral deposit with the credit card company. The credit card limit is equal to the amount of collateral.
• Pay everything on time – This is very important. Since the debts have been discharged by the bankruptcy, the remaining monthly living expenses should not be difficult to maintain. This is the beginning of a whole new credit history. This is where people who have filed for bankruptcy can prove to potential creditors that they are credit worthy and that the lending intuition will not be making a mistake in lending them money.
• Credit report tracking – People who have filed bankruptcy should be proactive and review their credit report annually (more often would be better). It is not uncommon to find errors on credit reports. Be diligent and correct any and all errors. It could be the difference between being approved or declined for a loan. Go to AnnualCreditReport.com to request a free credit report annually.

The Sacramento Bankruptcy Attorneys of the Law Office of Bowman & Associates serve clients across Northern California with their financial needs and questions including filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in California.

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