One of the most common fears about bankruptcy we see at Curry, Pearson & Wooten is the impact that filing could have on credit. Many people fear that their credit will be so bad that they will be unable to finance large purchases, get a job, or rent a home. While a bankruptcy will show up on your credit report for as long as a decade, it does not mean that you cannot actively build credit and end up in a better position than before your Arizona bankruptcy.
Proceed with Caution, but Do Not be Afraid to Proceed!
When you emerge from bankruptcy, it is very likely that you will be approached with offers for credit cards. There are a few reasons to be wary of these offers so soon after you have filed for bankruptcy. Most people are very careful to avoid any new debts, so they will often steer clear of credit cards anyway. The primary thing to be cautious of is the creditors offering these cards; many times, these cards will have a low spending limit and very high interest rate, which could pull you back into debt easily.
That is not to say, however, that you should not be spending money at all. The strange world of credit scores dictates that you improve your credit by using your credit responsibly. A bankruptcy discharges a lot of your debt, but you will usually emerge with two types of debt remaining—your student loans and any auto or home loans. By making full, on-time payments on these debts, your credit report will reflect that you are back on track as a responsible borrower.
Budget, Budget, Budget: The Road to Credit Success
When you file for bankruptcy in Arizona, at some point in the process you will required to take a debtor’s education course that will give you the tools to succeed financially in the years following your bankruptcy. While many people may see classes as a necessary evil, the budgeting tools and information you receive can help ensure that you are never back in the same shoes again.
Sitting down after your bankruptcy and making a careful monthly plan of your existing payments and living expenses is not only useful for seeing where your money goes, but it also gets you much more “in touch” with your finances and means. Being fully aware of every penny coming into and leaving your bank account will help you stay on top of your spending habits, and nip any potential problems in the bud.
Never underestimate the power of a firm monthly budget—most people who live comfortably well into retirement never “struck oil” financially speaking, but had a strict budget designed to maximize every dollar. Our Phoenix bankruptcy attorneys are not just here to help you file bankruptcy, we are also here to help you envision a better financial future—call us today at 602-258-1000 to get started now.