Getting your bankruptcy discharge isn’t the end; it’s the beginning. Sure, your discharge is the Holy Grail of the bankruptcy process, but it signals the beginning of your fresh start.
So do your happy dance. You’ve earned it.
But now what?
There are a couple of things to keep in mind.
Keep ‘em honest
First, your bankruptcy discharge is an injunction against the creditors listed in your schedules. With a few exceptions, they may no longer contact you to try to collect debt. If they do, it is a violation of the discharge injunction. The “discharge injunction” replaced the automatic stay and does the same thing–protects you from collection efforts on debts which have been discharged. You should keep a record of the contact (a phone log, letters, emails, and voicemails) and contact your bankruptcy attorney for help. You’ve done your part to comply with the law, now the creditors must do theirs or face possible sanctions.
Check and recheck
Next, and possibly most important, keep close track of your credit report. Three to four months after your discharge comes through, you should pull copies of your credit reports from the three major reporting agencies: TransUnion, Experian, and Equifax. Use the website www.annualcreditreport.com. This is a site managed by the three agencies. You are entitled to a free copy of your credit report every year (and also any time you are denied credit). Any debt listed on your schedules should be on your credit report as “in bankruptcy” or “satisfied in bankruptcy.” If any creditor is still reporting an account as open and late, dispute the entry. Do this the old fashioned way, rather than online. Send a letter certified mail, return receipt requested. Describe the error, and provide your bankruptcy chapter, case number, and discharge date.
Hard work pays off
Lastly, manage your future credit wisely. You will be pleasantly surprised how quickly your credit score climbs after your bankruptcy discharge.
Two types of credit have a major influence on a credit score: revolving credit and installment credit.
Credit card accounts are an example of revolving credit. You use the funds when you need them and pay them back monthly or over time. The amount outstanding fluctuates each month and there is no fixed number of payments. Installment credit is a loan that does have a fixed number of payments. Auto loans and furniture loans are examples of installment loans.
Both revolving and installment credit, paid on time, without maxing credit limits, will help to improve your credit score dramatically. Both types of credit are necessary to gain the maximum boost.
A good way to start is with a share secured loan. It’s a credit builder offered by most credit unions, and it counts as installment credit–more difficult to qualify for than revolving credit. You deposit a sum of money into you account. The credit union then lends you them the same amount, securing it with the money deposited. Each month, you make your loan payment, and the credit union reports to the credit reporting agencies. Once all payments are made, the credit union releases the funds in the share account. And your credit score improves as a result.
If you received your bankruptcy discharge, congratulations! But don’t stop now. It’s only the beginning to rebuilding your financial life.