Credit Post Bankruptcy

Contrary to popular belief, life after bankruptcy can be less stressful and, in fact, rewarding because all your financial weight has been lifted. Filing for bankruptcy means a fresh start financially. If you’ve recently filed for Chapter 7 or Chapter 13 Bankruptcy protection, it’s important to realize that it is not the end of the world. You will not be financially outcast and banished to years of credit exile. Let’s take a look at what happens post bankruptcy to your credit and financial standing. 

  • Be Vigilant – Post bankruptcy, regardless of the type, it is important to be aware of your finances and stick to a budget. Planning this budget may mean working with a credit counselor or a financial advisor so you don’t over spend or rack up any unnecessary debt.
  • Start to Rebuild Credit – One way that financial experts recommend rebuilding credit is to obtain a secured credit card. According to BankRate a secured credit card requires a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account, you can charge up to $500. Many banks will allow for secured credit cards if the petition for bankruptcy is more than a year old. Others charge high fees so be aware of the type of bank you work with to get your credit rebuilt.  There are some bank’s that seek out post-discharge debtors for new credit opportunities.  With your “fresh start,” they consider you a better risk.  Another option to attempt is cultivating a relationship with a small bank that can look at you as something other than a FICO score.  These banks are few and far between, but they do exist.
  • Be Aware of Credit Rating – A bankruptcy can remain on your credit report — and thus impact your credit score — for up to 10 years. Consumers should get a copy of their reports from all of the major credit reporting institutions: Equifax, Experian and TransUnion. The reports should be examined for errors, missing and/or inaccurate information regarding current residence, employment and personal contact information. Re-establishing a credit score means paying bills on time, and living on a budget. In some states, such as Massachusetts, residents are entitled to a free annual credit report.

 

Bankruptcy is meant as a way to gain a solid financial footing. Use your time post bankruptcy to manage your money wisely and rebuild your credit.

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