Rebuilding Your Credit After Filing for Bankruptcy

One myth about bankruptcy is that it permanently ruins your credit score and ability to borrow money. Declaring bankruptcy does affect your credit negatively. However, the negative impact does not last forever. A Chapter 7 remains on your credit report for ten years, while a Chapter 13 can last for seven years 10 years after your discharge, which may not happen until 5 years after you file.  Declaring bankruptcy causes your credit score to plummet. When your credit score decreases, receiving loans from lenders becomes difficult for you. Your credit score drop depends on the type of bankruptcy you file and other factors, but you will most likely lose not less than 150 points.

Nonetheless, you do not need to panic because your credit score dropped after filing for bankruptcy. You can rebuild your credit through the following ways;

Working With a Budget

As much as filing for bankruptcy does not mean that you are irresponsible, you should strive to always stick to following a budget after successfully filing for bankruptcy. When creating your budget, divide your expenses into three parts. The first part should be the costs that do not fluctuate, otherwise known as fixed expenses. Examples of these expenses are rent and Chapter 13 payments. If you filed for a Chapter 13 and missed to make payments, the court could dismiss your case. The other two parts are irregular expenses like health expenses and savings. It is vital that you save, regardless of the amount, because savings can alleviate unforeseen expenditures, which often affect credit scores.

Always Keeping Tabs on Your Credit Report

You must monitor your credit report each year and report any errors. Even the smallest mistake could cost you. Some of the errors you can find on a credit report include;

  • Inaccurate employer information
  • Inaccurate personal information
  • Incorrect late payments
  • Accounts that are still open yet should be closed
  • Other people’s debt information indicated as yours

Easing Your Way Back Into Credit

After filing for bankruptcy, you can obtain a secured credit card, which works on the basis that if you cannot pay back a loan, the cash deposits you make into the account will pay for it. Because of the money you deposit into your secured account, lenders find it less risky to lend you money. Obtaining and using a secured credit responsibly is a wise way of showing creditors that they can trust you again.

Using Another Person’s Card to Rebuild Your Credit

You can rebuild your credit using a friend’s or family member’s card. When you use another person’s card, your credit report will reflect their card. As long as they do not delay making payments, the primary cardholder can provide you with an excellent opportunity to boost your credit score.

Maintain Secured Payments

If you emerge with a car or house payment, it is imperative that you stay current with these. They will serve to increase your score more than any other factor.

Let Us Help You Today

If you are considering filing for bankruptcy but are worried about damaging your credit, contact a qualified Jupiter bankruptcy attorney at the office of Julianne Frank, Esq. at (561) 220-2528 for a consultation. We will help you understand which bankruptcy type you qualify for, and also help you understand the process of rebuilding your credit.