Starting Over After Bankruptcy

How to rebuild after a bankruptcy is one of the most often asked questions I hear when meeting with people who are considering bankruptcy. The question can differ slightly, such as how much of a hit will my credit score take or, when will I be able to get new credit or, how can I reestablish my credit? However it is asked, you will need to be intentional about rebuilding after a bankruptcy, and here are some thoughts and helpful hints about what that entails:

  1. Obtain a copy of your credit report to ensure all the debts you discharged are correctly reported. If you do not see the discharge showing up after a couple of months, file a claim with the credit agency.
  2. You will need to remain absolutely consistent in making timely payments on your mortgage or rent payments. The same holds true for your vehicle payments.
  3. Surprisingly, because you have been discharged and are no longer in debt, you may be actively solicited by creditors. You should refrain from applying for too many credit cards too quickly.
  4. Instead, you should slowly and methodically re-establish your use of revolving credit. You will need to pay the balance off each month. Make sure the credit you are applying for reports to all three credit agencies
  5. Consider a secured credit card if you are unable to obtain an unsecured credit card. Secured credit cards require you to put funds on deposit with the lender in an amount equal to your credit line. Then, manage this account just as if it were an unsecured credit card by paying on time and in full.
  6. Keep in mind that any credit you obtain right after your discharge will be expensive (i.e. your interest rates will be very high). Over time, you will get better rates, but only as you show you can properly manage your credit.
  7. Rebuilding after bankruptcy is not just about re-establishing your credit. It is also about making positive changes to avoid getting into debt again. So, the single most important thing you can do is to establish habits that help you live well within your means.

If you have additional questions about how to rebuild after bankruptcy, contact a competent bankruptcy attorney.