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How Can I Rebuild my Credit?

Many people put off, or refuse to consider bankruptcy because they are worried about what it will do to their credit rating. What they fail to realize is the tremendous damage that continues to be done to their credit rating by late payments, non-payments, and overages on credit cards.

While declaring Chapter 7 or Chapter 13 bankruptcy will have an effect on your credit rating, it is often the first step in rebuilding your credit score and getting your financial life back on track. The Chapter 13 reorganization plan is specifically designed to help you rebuild your credit by re-establishing a regular payment history with your creditors and focusing on reducing your overall debt obligations which will improve your debt-to-income ratio. To learn more about bankruptcy and alternatives to bankruptcy that may be available for you, contact the attorneys at Acclaim Legal Services.

What Factors Can Affect Your Credit Score?

Your credit score is based on a number of factors:

• Your past payment history (have you been on time or late with payments?)
• Collections proceedings, liens and judgments against you
• Charge-offs (when a debt is deemed to be uncollectable)
• The number of inquiries made regarding your credit (such as when you apply for a new credit card or a loan)
• The number of creditors you have
• The amount of outstanding debt you owe
• The length of your credit history

It can be valuable to get a copy of your credit report to see what banks, creditors, and even employers can see about your financial situation. We can assist you in pulling a credit report when you visit our office for the free initial consultation. It's not uncommon for credit reports to contain errors that you should correct.

Steps You Can Take to Improve Your Credit

• Work toward paying down debt: Obviously, this is one of the most important, and difficult steps for people who are experiencing credit or financial problems. There are two common strategies people use to eliminate debt: 1) paying down high-interest-rate cards first or 2) paying more on cards with a lower loan amounts so you can pay them off completely. Whichever method you choose, the lower your ratio of debt to available credit, the better your credit score will look.
• Limit your use of credit: Try to limit your charges and do not apply for more credit cards. Be aware that by taking advantage of that "10% off your purchase with application for a credit card" offer, you are adding yet another creditor and another credit inquiry to your record.
• Stay current and make your minimum payments: Again, although this is very difficult for people experiencing financial problems, late payments and missed payments have a snowball effect, adding even more fines and increasing your interest rate.

Debt Consolidation and Chapter 13

Chapter 13 reorganization is a debt consolidation program specifically designed to lower your debt and improve your credit rating. It does so in several ways:

• Interest rates are reduced to 0% interest on credit card debts, medical bills, and past-due mortgage payments, allowing you to make headway on paying down those bills and put money toward secured debts (such as a car loan)
• The repayment plan is based on your budget and individual circumstances. You only pay back what you can afford on unsecured debts. A portion of these debts may be discharged through the Chapter 13 proceedings. The goals is that at the end of the plan, you will be free of unsecured debts, a factor that will significantly help your debt-to-income ratio and improve your credit.
• A personalized payment plan is created to prioritize your debts and provide optimal repayment terms.

By following this repayment plan, you will be re-establishing a positive payment history and rebuilding your credit, month after month.

Debt Elimination and Chapter 7

Chapter 7 fresh start is an option for people who are unable to pay back their debt, even if their debt is consolidated and restructured. Chapter 7 can help you rebuild your credit by wiping out your existing unsecured debt. If your debt was the result of serious life changes, such as illness or job loss, you are now free to start anew.

Life with Good Credit

At Acclaim Legal Services, our attorneys can pull your credit report and evaluate it for you. We can review your financial affairs and advise you on whether Chapter 7 or Chapter 13 bankruptcy may be an option for you, or whether there are alternatives to bankruptcy that could help you.

The future can be better. Get sound legal advice about the options available to help you repair your credit rating and get back on your financial feet. Contact the bankruptcy lawyers at Acclaim Legal Services today. Your initial consultation is free. Call 866-261-8282

Acclaim Legal Services is a debt relief agency serving people in Wayne, Oakland, Macomb, Livingston, St. Clair, Genesee, Jackson County, Lenawee County, Monroe County, Sanilac County, Lapeer County, Shiawassee County and Washtenaw Counties including Detroit, Livonia, Flint, Southfield, Pontiac, Mt. Clemens, Warren, Royal Oak, West Bloomfield, Troy, Ann Arbor, Dearborn, Sterling Heights, Ypsilanti, and Farmington Hills. We help people file for bankruptcy relief under the Bankruptcy Code.