There are many concerns that people have when they are dealing with unmanageable debt. Many folks have lost their job and are having difficulty finding a new one, which can be stressful enough. Or they are coping with health issues that caused an influx of medical bills. The reasons that a person finds themselves with mounting bills are often just as troubling as the bills themselves. Combine all this with the continuous calls from collection agencies and it is no wonder that people across New Jersey who are struggling with debt are so overwhelmed.
In many cases, a person may be considering a number of debt relief solutions, including bankruptcy protection. And this person would not be alone; last year 1.2 million people in this country filed for bankruptcy. It can certainly be an effective solution, but some people are hesitant to seek out this type of help. One of the issues that people struggle with when they are considering the option of filing for bankruptcy is how they will rebuild their credit afterwards.
Filing for bankruptcy has an effect on a person’s credit score. A lower credit score can affect a person’s interest rates, insurance payments and, in some cases, career opportunities, but there are a number of ways that people can rebuild their credit after a bankruptcy.
After filing for bankruptcy, a person may want get a secured credit card. These types of cards allow a person to have a credit limit equal to the amount that is deposited into the card, which keeps a person from overspending. Issuers of these secured credit cards can report the activity to the three credit bureaus which can help improve a credit score.
It is also suggested that people obtain and then use retail or gas station credit cards responsibly. Paying down a balance on time on a card that is being used appropriately can have a very positive effect on a credit score. This may also be true for people who can finance a car. As long as it is affordable, purchasing a car and making payments can illustrate that a person is a responsible borrower.
Rebuilding credit takes some time. It cannot be done overnight, just as most debt was not accrued overnight. It is a process that can seem challenging for many people, but with the right habits and resources, it will happen.
Source: Fox Business, “How to Rebuild Your Credit After Filing for Bankruptcy,” Roman Shteyn, March 5, 2013
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