Filing for bankruptcy can make people feel that they can never manage their finances ever again. However, it is only temporary when it comes to reality, and although it might affect your credit score, you can still perform purchases, and you can recover from this inconvenience.
It can be a hassle for everyone, especially if you plan to rent an apartment, acquire a credit card or even buy a car. However, many do not know that this will not affect your capability to own these things. You can still do so, but you must foresee that the rates for your interest that are charged will be much higher since there is an ongoing bankruptcy compared to that without the said inconvenience.
Obtaining a Credit Card
Procuring a credit card is not a problem, even for someone who is currently experiencing bankruptcy. Whenever you have finished paying your dues and acquired your discharge, many bank companies will grab the opportunity to deliver you various credit card applications to encourage you to apply for one.
However, you must consider that you are only eligible to apply for cards with no credit or secured credit cards if you still have an ongoing bankruptcy. Also, you must acquire court approval before you can obtain a credit card. Therefore, the best thing to do is apply for a credit card after receiving your discharge from the court.
Buying a House
To buy a house, first, you must reestablish your credit to gain the trust and confidence of lenders and banks. Next is to rebuild your foundation by getting a secured credit card where you buy only the things you can afford and pay it every end of the month. This way, it improves your behavior towards your purchasing power. After paying your secured credit card for some time, you can now apply for an unsecured credit line so you can show your responsibility towards paying debt and handling multiple credit cards.
If the court has granted dismissal on your bankruptcy, you must pay your existing debts as much as you can. On the other hand, when you are given a discharge, you must not apply for more debt that you cannot pay every month. One vital thing that you must do to prove your sense of responsibility is always paying your dues on time. You can pay through electronic payment services to save yourself from the hassle of having to leave your house and waiting in line in banks.
Consequently, you can now write a letter of explanation regarding your bankruptcy and submit it with your mortgage application. Next is to get preapproved so you can prove that you are severe and creditworthy about offers. Finally, ensure that you are readily available for lender questions and transparent in answering queries.
Rent an Apartment
Renting an apartment is not that difficult even if you have filed for bankruptcy because many landlords don’t consider bankruptcy a negative thing. Instead, they are willing to listen to your narrative, and they are also more interested in the amount of cash you have to pay for rent than the fact that you have filed for bankruptcy.
Aside from this, they also tend to look at your job stability, employment history, bankruptcy case status, filing date, and credit history. You can motivate a landlord to rent to you by showing your rent payment records (assuming that you have not broken any leases or rental agreements).
Buying a Car
Purchasing a car is not a problem even with a bankruptcy going on. Still, you must know if this will make your situation worse to the point of overextending your finances or whether this is to improve your financial status.
Buying a car post-bankruptcy is something to think about. Needing and wanting are two different things, and many factors must be considered before acquiring a new vehicle. Interest rates charged to people with bad credit scores are three to four times greater than those with the best credit scores. However, you can still apply for car loans for a more inexpensive and dependable vehicle.
Conclusion
Bankruptcy is something that can put a significant mark on your credit scores. However, you must not always look at it as something negative. Bankruptcy can become a tool in improving your financial behaviors and, in the future, provide you with a better credit score. Surviving this inconvenience also allows you to gain the trust and respect of many banks and lenders.