I recently found a man in a situation where he had IRS problems which compounded into filing a personal bankruptcy.
After all was said and done, this individual was operating on whatever amount was left over after taxes and the disbursements which were to partially pay back creditors.
The year was 1994, and even though there was enough left of his paycheck to buy groceries, pay utilities, and have cable TV, care had to be taken and extravagant spending was a thing of the past.
By 1999, there was light at the end of the tunnel; a 2-year old car was financed and a credit card with a $200 limit was in his wallet in order to rent a car if needed.
The two year old car lasted five years and was traded in on another car (this one three years old). Financing was difficult to obtain but in both cases Americredit took a chance with this individual. The interest was high, 21% the first time and 17% on the second car he bought. Luckily, all but one payment in 6 years was on time, and it was 30 days late.
In August 2005, this same guy decided to see if he could once again be financed and possibly get a newer car and a lower interest rate. Honda American Finance liked his record and gave him a 4.9% rate on a 2 year old Acura. Things were beginning to look up.
Just this month, this same man who had filed bankruptcy in 1994 was approved on a 100% purchase of a $200,000 property. Can you believe no down payment!
Also, since he paid the asking price for the property, the seller paid all his closing costs.
This guy is really happy and excited. From what I hear, he feels like a citizen again. He bounced back. Was it easy? Yes. Did it take baby steps? Yes. Can you do it? Yes.
If you’ve done a portion of what this guy’s done, continue on. It’s never to late to start over. You can bounce back sooner than you think.
5 Tips To Rebuilding Your Credit
1) It’s important to rebuild your credit and begin to add “trade lines”. Any small credit (local or otherwise) can be used to build on. Zales, Orchard Bank, and First Premier Bank are all credit sources which offer low limits, but will help.
2) Save your cancelled checks. If you’re renting, pay by a check. If you must pay by money order, make sure it has the date stamped on it (not you writing the date). Save cancelled checks which are paid to utility companies. (Some lenders will allow cable TV, trash, electric and other utilities to be considered as trade lines).
3) Seek out car dealers and mortgage brokers that are “bankruptcy friendly”.
4) Clean up your credit report. Your credit score is based on information in your credit report, so errors on your report can seriously dampen your score.
5) Most importantly, don’t lie dormant. Any credit glich is a bump in the road, and does not define your character. Pay on time, manage small accounts, keep balances low.
By the way…if you haven’t already figured it out…the guy we’re talking about .......is me.