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If you feel like you’ve hit rock bottom by filing for personal bankruptcy, you’re not alone. Non-business bankruptcy cases totaled 752,160 in 2020, according to the Administrative Office of the U.S. Courts.

So how can you bounce bank from personal bankruptcy?

Thankfully, you don’t have to wait seven to 10 years until the bankruptcy comes off of your credit report to start rebuilding your credit history. You can:

• Make a Budget
• Use Cash
• Pay Bill On-Time
• Apply for a Secured Credit Card
• Add Positive Accounts to Your Credit History

You’ll undoubtedly experience some hardships immediately after a bankruptcy. To help you bounce back without added stress, we’ve outlined some tried-and-true ways to help you get back on your feet.

Make a Budget—and Stick to It

If budgeting sounds terrifying, you’re not alone. But, since overspending is one of the most common reasons people file for bankruptcy, it’s important to create a budget and track your spending.

Start by writing down your fixed expenses such as your mortgage payment or rent, utility bills, insurance— basically anything that you pay monthly. Next, determine how much to allot for food, clothing, and entertainment. Lastly, leave a little wiggle room in your budget for discretionary spending and savings.

Once you’ve finalized your list of expenses, you need to make sure that your budget can cover all of the costs. Depending on your monthly income, you may find that you need to make adjustments to certain expenses.

For example, the average American household spent $7729 a year on food in 2017, according to the U.S. Bureau of Labor Statistics. Of that total, $3365 was spent while dining out—about 44%. You can easily adjust your food budget by eating at home more often or taking your favorite beverage with you rather than hitting up your local coffee shop.

Now that you know your fixed expenses and budgeted for others, you’ll need a way to track your spending. Spreadsheets are one option, or you can install a budgeting app on your phone. The finance experts at Nerdwallet recently released their list of the Best Budget Apps for 2020. They include:

• Mint
• YNAB
• EveryDollar
• PocketGuard
• Clarity Money
• Goodbudget

Use Cash

If you’re prone to overspending, paying with cash can help you stick to your budget—and keep you from using your credit cards.

When you use cash instead of a debit or credit card, you’ll find that you tend to prioritize your spending habits. Rather than buying a snack at the gas station, you’ll instantly know that the purchase could put your grocery budget in a deficit.

Using a cash-based system can be temporary, but it’s a good first step. Once you have an established budget and know how to stick with it, you can consider using debit or credit cards again.

Always Pay Bills on Time

It’s important to always pay your bills on time since your credit payment history determines 35 percent of your FICO Score, according to myFICO. Your credit history is one of the first things lenders consider, and late payments can quickly impact your credit score.

If you still have credit cards, installment loans, or mortgage loans after your bankruptcy, be sure to make your payments on time. That way potential lenders know you’re working toward rebuilding your credit.

One of the best ways to stay on top of your bills is to set up auto-pay on your accounts. With auto-pay, you won’t have to worry about missing a payment on an account that could drastically impact your credit score.

Another option is to keep a calendar with your budget that lists the date and amount due for each of your reoccurring payments. You can use a calendar app to alert you to make a payment before the due date.

Get a Secured Credit Card

Secured credit cards are another way to help you bounce back from bankruptcy—and rebuild your credit history.

When you apply—and get approved—for a secured credit card, you’ll put down a minimum security deposit of $200 to $500. Some cards have maximum deposit limits, while others don’t. With most secured credit cards, your credit limit is equal to the amount of your security deposit.

For example, if you deposit $400, that’s your credit limit.

You can use a secured credit card the same way you use a regular card. Since you’re working to put your bankruptcy behind you and build credit, NerdWallet suggests limiting your spending to 30 percent of your available credit. Of course, on-time payments are essential, too.

A few factors to consider when selecting a secured credit card include:
• Annual Fee
• Security Deposit Amounts—Minimum and Maximum
• APR
• Options to Upgrade to an Unsecured Credit Card
• Reporting to Credit Bureaus
• Rewards Programs
• The Ability to Qualify Without a Credit Check

Add Positive Accounts to Your Credit History

Qualifying for unsecured credit cards, loans, or lines of credit can be difficult after a bankruptcy. Fortunately, you can improve your chances with lenders by adding positive accounts and current bills to your credit history. Two programs that allow you to add other types of financial information to your credit report are Experian Boost and the upcoming UltraFICO.

With Experian Boost, you give Experian permission to access your bank account information and identify utility and telecommunication payments, such as your electric and cell phone bills. Then you’ll have the opportunity to review the information and decide whether you want to add it to your Experian credit report. If you qualify for Experian Boost, you’ll see a change in your credit score immediately.

Experian Boost is a consumer-friendly option since they only consider on-time payments. If you happen to make a late payment while you’re enrolled in the program, it won’t negatively impact your credit score.

UltraFICO is still in the pilot phase, but you can sign up on the website to receive alerts when it becomes available.

Filing for personal bankruptcy doesn’t mean you can ignore your credit history. Although the bankruptcy will stay on your credit report for several years, it is possible to improve your credit score—and enjoy a better quality of life.

Hines Law has been offering low cost bankruptcy solutions and debt relief options for over 15 years. Our full-service bankruptcy law firm specializes in Chapter 7 and Chapter 13 cases filings with a high degree of success in helping clients obtain lasting debt relief in a timely and effective manner.

The bankruptcy attorneys at Hines Law understand the emotional stress and support as well as compassionate advice when it is needed most. You deserve a fresh financial start, call us today for a Free Case Evaluation!