Financial Recovery

Keep doing a budget

  1. Rebuild your savings – having savings protects you from financial problems that may arise.
  2. If you postponed home repairs or maintenance or other necessities, you need to evaluate them to see if they need to now be new priorities.
  3. If you cut back in areas, such as auto maintenance, does it now require attention to prevent future problems?
  4. If you stopped paying low priority debts, are you now able to address them?
  5. If you reduced or stopped contributions to a retirement plan, are you now able to resume your full contributions?
  6. If you reduced your insurance or medical coverage, are you now able to resume them?

Credit Card Choices

  1. Have you reduced your reliance on credit card choices? Are you now able to pay your credit card in full each month?
  2. Evaluate your credit card to ensure you have the cheapest credit card available. Make sure you understand all the terms of the card. Do not get a credit card with an annual fee or a high interest rate.
  3. Have you resolved any disputes regarding how much is now due?
  4. If you are unable to payoff your credit card in full each month, are you able to pay more than the minimum payment due?
  5. Are you still using a secured credit card when a lower rate, unsecured card might be available?
  6. Make sure you are not falling prey to “easy credit” offers. These often have hidden fees and hidden costs.

Protecting your home or apartment

  1. If you have caught up on your mortgage or rent payments, have you reviewed your recent bills to ensure that your financial institutional or landlord agree that you are caught up? Are all court cases to related to foreclosure or eviction dropped?
  2. Do you have enough saved to pay for any needed future repairs? Do you have enough saved to get you through future financial difficulties?
  3. If you are still experiencing financial difficulties, have you considered down-sizing your housing? Would a lower payment reduce financial pressure on your household?
  4. Are you implementing utility conservation measures to make your home less expensive to maintain long-term?
  5. Do you have the best and lowest cost home insurance you can get?
  6. Have you applied for real estate tax abatement to which you might be entitled?
  7. Is your escrow payment increase larger than expected? If you’re caught-up on back payments, there might be an error in your escrow. Financial institutions are sometimes careless with escrow account. If you are unable to resolve this issue with your financial institution, you might have to get your lawyer involved.

If you filed for bankruptcy

  1. Make sure you have a copy of your bankruptcy discharge and store it in a safe place.
  2. Make sure you know which debts you are still responsible for paying. These are debts that were not discharged in bankruptcy.
  3. Review your credit report to ensure the debts discharged in bankruptcy are not showing up with an outstanding balance. The balance should be $0. Make sure you resolve any errors on the report.
  4. Are collection agencies still bothering you about debts that were discharged in bankruptcy? If they are, contact your lawyer.
  5. Contact your lawyer if you successfully filed Chapter 13 bankruptcy and are still receiving correspondence from your home or auto lender stating you are behind.
  6. Have you dealt with problems that caused your financial problems? Are you going to be able to avoid them in the future?

Rebuilding credit

  1. Check your credit report to ensure its accuracy.
  2. Resolve any disputes about your credit report or submit explanatory statements to be included when your report is distributed.
  3. Have you established new and better credit practices, which will demonstrate to new creditors that you are a good credit risk? Consider borrowing small amounts and then paying them off immediately to show lenders you know how to handle credit.
  4. Cancel any unnecessary credit cards and lines of credit that may cause concern to new creditors about your credit worthiness.
  5. Limit yourself to one unsecured credit card with a low rate.
  6. Avoid credit card solicitations by opting out of offers. Go to optoutprescreen.com or call 1-888-5-optout.
  7. Shop around for good credit terms. Just because one creditor thinks you’re a high-risk borrower does not mean another will feel the same.
  8. Provide a good explanation and evidence about your past financial problems when buying large ticket items, such as homes, autos, etc.
  9. Don’t worry unnecessarily about your credit report. After you have resolved your financial problems, ensure that you reduce your reliance on credit.

Avoiding scams

  1. Do not pay for credit repair. If you have fallen behind on many debts, no agency can clean up your credit record. Any promise to do so are lies.
  2. Avoid taking on high rate loans to tide you over. Some creditors might offer these to you to “help” you get back into the credit market. Especially avoid high interest rate loans secured by your home. Some creditors falsely promise to reduce the after you have made timely payments over a year. These type of lenders are trying to rip you off.
  3. Don’t immediately believe a lender when they tell you are a “subprime” borrower and therefore can only obtain high rate loans. Always shop around for lower rates. You will probably find a lower rate with another lender.
  4. Be leery of loan brokers or companies touting their services as loan brokers. Some of these are looking to get you into high rate loans where they make a higher commission. Be especially leery of those who target people with financial problems.
  5. Be leery of companies touting “no credit check” or “bad credit no problem”. These companies are probably loan brokers looking for borrowers who consider themselves too risky to pass a credit check. These companies are looking for borrowers who’ll sign-up for high rate loans. You might find that a reputable lender might not consider you such a high risk and offer you a better rate.
  6. If you are considering going back-to-school, do your homework. Getting a degree, certificate or a higher degree might make you more marketable. Be careful that you don’t end-up with a rip-off school that ends up giving you a bad education, and gets you settled with a large amount of student loan debt. Don’t take on new debt that you cannot afford. First, check out low cost alternatives, such as community colleges. Look for scholarships and grants. Evaluate the school. Obtain information about their school completion, job placement, and other performance methods.
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