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23 October 2015
 October 23, 2015

5 Tips for Repairing Your Credit after BankruptcyYou have successfully filed for bankruptcy and had your plan approved by a court. Now you are looking forward to the day when your bankruptcy is fully discharged. However, what will you do then? After all, you have been told that a bankruptcy will remain on your credit history for up to seven years. Even worse, you have heard that your ability to borrow will be very limited for the foreseeable future. You are anticipating your finances could be tight.

It is true that bankruptcy is never a good situation to find yourself in. Nevertheless, filing for bankruptcy does not mean your life is over. You can get your finances in order and rebuild your credit over time if you are willing to employ a bit of discipline and patience. Below are five tips you can use to repair your credit after bankruptcy:

1. Establish and Maintain a Budget

The number one reason people find themselves in financial trouble is a failure to budget. Creating and maintaining a budget is the very first step in bankruptcy recovery. What is a budget? It is a financial planning tool that accounts for all the money you have coming in and all that you have going out. Without a budget, it is nearly impossible to get a full picture of how much money you are spending. With a budget, however, you will know exactly where you are every single month. A budget is one of the best tools for managing your money.

2. Get Rid of Unsecured Credit Cards

Unsecured credit cards make it too easy to go back into debt after a bankruptcy. If you filed Chapter 7, creditors likely closed any credit card accounts you had. Either close those accounts and destroy the cards or give the cards to someone you trust for safekeeping. The idea is not to spend any more on those cards until your credit has been sufficiently rebuilt.

3. Apply for a Secured Credit Card

An excellent way to begin rebuilding your credit is to apply for a secured credit card. This kind of credit card requires a cash deposit from you as a guarantee that you will pay your bill. For the sake of argument, let us say you apply for a card that requires a $500 deposit. That $500 serves two purposes: it establishes your maximum credit limit, and it gives the credit card company the ability to recover its money if you fail to pay your bill. Obtaining a secured credit card and paying your bill every month will do very good things for your credit history.

4. Pay Your Bills on Time

All of the bills you usually pay affect your total credit history and score. Therefore, rebuilding your credit after bankruptcy is only possible if you are diligent in paying your bills on time. This includes your mortgage, car payment, utility bills, etc. If you fall behind due to something like health problems or loss of a job, contact your creditors and work something out with them. Just ignoring your bills will not make them go away; it will negatively affect your credit history.

5. Review and Correct Your Credit Report

Federal law requires credit-reporting agencies to provide one free credit report per year to every customer who requests one. Take advantage of this to review your credit and correct it if necessary. If you find mistakes, do not be afraid to contact the reporting agency to determine what steps can be taken to remedy them. You do not need any inaccuracies making your already damaged credit worse.

Repairing your credit after bankruptcy is possible, but it takes time and patience. For more information about bankruptcies and their aftermath, feel free to contact our law offices.

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