Is There Life After Bankruptcy? Sure - Part Two

Today we will continuing with the part two of our Article about the life after bankruptcy, I hope you can find answers for all the questions that I received as the following:

3- Check Your Credit Report:

Just because the bankruptcy court cleared your debts doesn't necessarily mean that they have been expunged from your credit report. According to a recent article in BusinessWeek, in a number of cases some financial institutions failed to report debts that had been discharged by bankruptcy courts to the credit rating firms, even though they are legally required to do so. If the debt is not reported as cancelled by the lending institution, it will remain delinquent on your credit report, potentially sabotaging your efforts to build new credit or obtain life insurance or even employment.

In order to make sure that the bankruptcy court's orders have been accurately carried out, you should examine your credit report on at least an annual basis. You can obtain a copy of your credit report without charge once every twelve months from each of the three nationwide consumer credit reporting firms (TransUnion, Equifax and Experian). Copies of your credit report can also be requested online (at annualcreditreport.com) or by contacting the credit reporting firms directly.

Credit information (late or missed payments, delinquencies, etc.) remains on your credit report for seven years; a bankruptcy will linger there for ten. Note that the three major firms do not always compare information, meaning that the information on one report may differ from that compiled by a different firm. In order to ensure that all the information in your reports is accurate, you should obtain a report from each of the three firms.

Of course, making sure that bankruptcy debts have been discharged isn't the only good reason to look at your credit report. Errors in reporting by financial institutions can lead to inaccurate and potentially damaging inaccuracies that can drag your credit down. Taken with the threat of identity theft, checking your credit report periodically is a good idea, regardless of your credit status.

4- Landing a Loan:

Once, a bankruptcy was a nearly insurmountable obstacle to obtaining a loan. Many banks would not even consider lending money to someone until the bankruptcy had cleared from their credit report a ten year wait. "That's not true anymore," says Jim Shea. "Banks are much more eager to lend money today and more willing to work around difficulties." Also, she notes, bankruptcy simply isn't the damning black mark it once was. "That said, most lenders will want to wait at least a year after the bankruptcy and see some evidence that you've put your financial house in order before they even consider a loan," Shea says. Hence, rebuilding a credit history using secured credit cards will go a long way to helping you get a bank loan.

Even if banks are willing to lend you money after your bankruptcy, those loans will likely come with higher interest rates and fees a reflection of your damaged credit rating. Many banks may request the loan be secured either by collateral a physical asset you own or by a co-signer, someone with good credit who will agree to pay off the loan in the event you default. "Many people find it embarrassing to ask a friend or relative to co-sign a loan for them and it's a big thing to ask anyone to do but for a lot of people who've gone through a bankruptcy, and don't have many assets left it's the only way they are going to get a loan," Shea says.

5- Building On Success:

Once you have begun rebuilding your credit, the best course of action is to stick to it. "It's really pretty simple," says Detweiler. "If you have a couple of credit cards and pay them on time along with all your other bills then your credit will recover in time." Detweiler notes that paying bills early has no effect on credit since only late or missing payments get reported to the credit bureaus. She also recommends keeping purchases small and avoiding carrying balances on the cards while rebuilding credit. "High balances lower your overall credit rating. The goal is to keep the cards active and create a history of on time payment," she advises. "Just make sure the payment arrives by the due date."

Massachusetts contractor Mike Palladino followed this advice. He obtained a secured credit card and convinced his brother to co-sign for several loans. "It wasn't easy and money was really tight for awhile, but within two years, I had my business back up and running," he says.

Morin Bishop is editor -in- chief of Priority magazine ===================================== The Source is: http://smallbusinessonlinecommunity.bankofamerica.com =====================================