How To Rebuild Credit After Bankruptcy

Many consumers mistakenly believe filing for bankruptcy forever ruins credit scores. The reality is people can repair their scores during and after bankruptcy. This is not to say bankruptcy does not damage scores. It does hurt a person’s credit in a big way. However, many consumers can get their financial lives back on track despite filing for bankruptcy protection. Here are some proven ways to rebuild credit scores.

Pay Existing Accounts on Time

Bankruptcy does not protect all accounts, so it is imperative to pay those accounts on time to rebuild credit scores. If the monthly obligation is not met after filing, there is little chance of repairing credit scores.

Additionally, consumers should never ignore any accounts that show up on their credit reports. If it is a legitimate account, it must be paid. If not, it must be removed.

Apply for a Secured Credit Card

Consumers can improve their credit scores by applying for secured credit cards. This form of credit requires a deposit before consumers can access any funds, and the initial deposit represents the maximum credit limit.

By paying secured credit cards on time, consumers will start to see their credit scores improve with each timely payment. Additionally, many secured card issuers will switch it to an unsecured card with repeated on-time payments.

Limit New Credit

Consumers should limit the number of credit card and loan applications they submit. If at all possible, people dealing with bankruptcy and credit issues should not apply for any new unsecured credit until their scores start to improve.

When consumers apply for new credit, it shows up on credit reports as hard inquiries, which lowers credit scores. When creditors deny applications, it has an even more significant impact on scores.

Avoid Scammers

Many credit repair companies and other organizations claim they can remove bankruptcies from credit reports. Unfortunately, this is not possible. Once a bankruptcy gets reported to the credit bureaus, it cannot be removed for a minimum of seven years.

There is nothing any organization or company can do to remove a bankruptcy from a credit report early. These companies usually just file a dispute on behalf of consumers after they have taken a significant amount of money. The dispute, however, will go nowhere.

This article was originally published on HenryComteVelasquez.net

Tips For Filing Your Taxes After Bankruptcy

People filing for bankruptcy must still pay their taxes. Whether they file for chapter 7, chapter 11 or chapter 13 bankruptcy, tax forms must include both individual returns and bankruptcy estate returns. Here are a few helpful suggestions for bankruptcy filers who want to know how to pay their taxes:

Filers May Need to Ask Their Attorney for Assistance

Since most people filing for bankruptcy file via the help of an attorney, their lawyer typically files tax forms for the client’s bankruptcy estate. This estate is created to pay back creditors with nonexempt assets. The person who files for bankruptcy, or the person’s trustee, file the necessary tax forms. Bankruptcy filers neglecting to pay their taxes by the deadline may find that their cases are dismissed.

Bankruptcy Filers Must Pay their Taxes

Taxes after filing for bankruptcy are viewed as new debts. Debtors are not permitted to have brand new debts. A debt includes any money owed to the Internal Revenue Service (IRS). Asking a bankruptcy attorney for assistance involves providing the lawyer with previous tax records. Additionally, a client should tell their bankruptcy attorney about any tax refund check.

Chapter 7 Tax Form

A person filing for Chapter 7 bankruptcy needs to file an individual Form 1040 tax form. A chapter 7 bankruptcy is not viewed as a debt. However, the trustee still needs to file Form 1041 for the bankruptcy estate.

Chapter 11 Tax Form

Filing for chapter 11 bankruptcy means that the filer controls their assets and does not need a trustee. Instead, the filer is the bankruptcy trustee and files an individual Form 1040 and Form 1041.

Chapter 7 and Chapter 11 Bankruptcy Require Two Tax Forms

Although there is a difference as to which person is viewed as the trustee, chapter 7 and chapter 11 bankruptcy filings require submitting Form 1040 and Form 1041. Unfortunately, many people filing for bankruptcy do not know they need to file both tax forms.

Chapter 13 Bankruptcy and Taxes

People filing for chapter 13 bankruptcy still need to file Form 1041. The difference is that chapter 13 filers must give all tax returns to their trustee who then furnishes the tax refund to creditors.

This article was originally published on HenryComteVelasquez.com