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Starting over financially after Chapter 13 bankruptcy


It's rare that a Tennessee consumer would be enthusiastic about filing for bankruptcy, but when facing enormous financial challenges, it is often the only way out of debt. Although many consumers are embarrassed to talk about their bankruptcy with others, it's not the end of the world. In fact, many people buy cars, open new lines of credit and even purchase houses a few years after filing for Chapter 13 bankruptcy. Although it won't happen overnight, it could happen sooner than one might think by getting back to basics.

A consumer's credit score takes a huge hit after a bankruptcy. This makes it difficult to apply for credit or make large purchases in the first few years following a filing. But fortunately, even though a bankruptcy stays on one's credit report for 10 years, a consumer doesn't have to wait that long to start rebuilding his or her credit.

Small steps can help a lot toward this goal. It's important to pull copies of one's credit report annually and check for errors. Paying bills on time is also a good idea. If any loans were not discharged in bankruptcy, show responsibility by paying them off, since any negative feedback can drop one's score even lower.

Despite what one would think, it's not a good idea to avoid credit altogether. The trick is to use it responsibly. Apply for a credit card and use it for small purchases. Pay it off monthly without incurring interest charges.

Rebuilding credit is hard work, but it is not impossible. By being proactive, a consumer can raise his or her credit score quickly and qualify for loans and credit sooner than expected.

Source: Huffington Post, "How to Rebuild Your Credit After Bankruptcy - Fast," Curtis Arnold, Oct. 15, 2014

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