After Bankruptcy, Can I Really Rebuild My Credit?

As Knoxville bankruptcy attorneys, one thing we know for sure is that the ill effects of bankruptcy can be devastating for your credit score.  A Chapter 7 bankruptcy will haunt your credit report for the next 8 to 10 years, and there is little you can do about the fact that it is listed in the credit report. However, all is not lost. Continue reading. For most folks by the time a bankruptcy is filed the credit score is already in the tank. Don’t be surprised to find that your credit scores take a huge plunge anywhere from 150 to 250 points after your bankruptcy case is filed. The other side of the coin has a brighter side such as since you have filed for bankruptcy, you don’t owe anyone a nickel or dime and no more hiding behind closed doors from the dreaded debt collectors. Go outside, enjoy the day all the while thinking about the valuable lesson you learned regarding your financial habits.

After you file bankruptcy, begin immediately to take steps to strengthen your credit score. Immediately start to rebuild your credit history with a new found passion, intelligent choices and informed decisions. Rome wasn’t built in a day, and now you should consider your credit scores as Rome and get to building it, step by step with careful planning and a long term approach. You can take solace in the fact that it will be built once again and it will be built by you. Recognize however that your financial problems were created by utilizing debt, so be very careful both short term and long term.

The credit industry is a perfect place for conspiracy enthusiasts. We have seen people get destroyed after filing for bankruptcy, and then there were people who bounced back on to their feet within 28 months with a whopping score of 600 – 700. Sounds suspicious? Sorry to burst your bubble, but it’s not a conspiracy. The numbers are backed by financial science.

The people who successfully managed to survive the bankruptcy hurricane were able to do so by having a vigorous and straight forward credit rebuilding agenda. They religiously followed the credit commandments, while others were busy shedding tears over the bankruptcy road roller which crushed them and their future.

The filing of bankruptcy is usually accompanied by a preconceived and popular, but not entirely true notion that you can’t get credit for at least 2 years after declaring bankruptcy. The truth behind this notion is that you can’t get a mortgage for 2 years or a car loan on decent terms. But getting a secured credit card is quite possible as well as very important to start the rebuilding process of your credit present, future and history. Once you’ve obtained a secured credit card, be very careful when using it. Never, and I repeat, never, use more than 70% of the credit available on the card. Amazing as it seem, using more than 70% will actually hurt more than help. Pay the card up and down (always before the due date) for about 4 months. However, never pay it to zero. Always leave a balance of between $25 and $50.

After you’ve done this for several months, then you may consider to go ahead and get another a secured credit card. Use it in the same way, and for sure be careful. (Remember, running up credit cards likely forced you into bankruptcy.)

Now let’s move on to some steps you may want to take in order to successfully rebuild your credit after filing for bankruptcy:

• To qualify for an unsecured credit card while rebuilding your credit you will need to open a checking or savings account, preferably in a large bank.

• Try to save at least 25% of your paycheck. (Begin saving 5%, then, 10%, and build up to 25%.)

• Pay every bill on time e.g. utility, rent, etc. Pay with checks and keep copies of the cancelled checks.)

• Store and Gas Company credit cards will help in establishing credibility, try to get no more than one.

• Add an installment loan to your credit history by getting a used car with a co-signer.

• Save as much as possible during the first six months after filing for bankruptcy.

• Periodically check your credit reports, and make sure that only accurate information is listed on it.

• Minimize the total count of inquires on your credit report.

Rebuilding credit after bankruptcy means getting a new credit life, it will require extensive surgeries and face lifts, but it is possible and doable. Remember, this is a marathon, not a sprint. Take these steps one at a time. Remember the goal is to build a sustainable good payment record and the resultant good credit score.

Contact Knoxville – Sevierville Bankruptcy Attorneys

If you are considering bankruptcy, trust the experienced attorneys at Scott Law Group, PC. We’ve been filing consumer bankruptcy cases since 1983. We offer a free consultation to discuss your situation and to help you explore your options. If you are considering bankruptcy call us TODAY at 865-246-1050.

Other Articles of Interest:

Do I have to pay my bills while in a Chapter 13 bankruptcy?

Can I file bankruptcy without my spouse?