Life After Bankruptcy: How to Repair Your Credit

Filing for bankruptcy is no joke, and obviously, should be taken very seriously. But it certainly isn’t the end of your life or your credit. You need to be proactive though, taking steps as soon as possible after bankruptcy to rebuild your credit.

You can also take comfort in the fact that even though a bankruptcy is visible on your credit report for several years, it actually stops affecting your credit score well before it drops off.

In the meantime, here are a few things we would recommend doing to help repair your credit after a bankruptcy.

Don’t repeat history. Whether your bankruptcy had to do with excessive spending beyond your means or circumstances beyond your control, do what you can to make sure the same thing doesn’t happen again. This could mean drastically reigning yourself in with a strict budget. It could also mean creating a rainy day fund or really focusing on putting money into savings.

Get back on the credit card horse. It may seem counterintuitive, but one of the quickest and best ways to rebuild your credit after bankruptcy is with a credit card, particularly a secured credit card. Of course, you don’t want to pile up more debt, but a positive payment history is crucial. There is a little more involved with actually getting a credit card after bankruptcy, but it is possible.

Brace for big purchases. If you need to make a large purchase, such as a car, you need to have used your credit card responsibly for at least six months. This will add to your credit score and show that you can be trusted to make on-time payments. If possible, it’s also a good idea to save some cash for a down payment. This will help lower your financial burden so you don’t set yourself up for another debt trap.

And even bigger purchases. If buying a car is a big deal, buying a house is much bigger. You will have to wait a specific amount of time based on the type of bankruptcy you had and the type of loan you want. This period will typically be two to four years. You will also have to be able to show at least 12 consecutive months of on-time payments and permission from the court to take on new debt. It’s possible that you might see higher down payment requirements, such as 10% down instead of the traditional 3.5% for an FHA loan.

In order to repair your credit after bankruptcy, it will take time and effort. It needs to be obvious that you are making an effort to be more responsible with your financial choices, paying bills on time, and managing your debt better. Making even small, smart choices everyday after your bankruptcy will slowly but surely rebuild your credit and your reputation as a trustworthy borrower.

If you are struggling with excessive debt and looking for a sound solution, the attorneys at Tom Bible Law, can help you explore your legal options. We have helped numerous clients from Chattanooga and throughout Tennessee and North Georgia achieve their debt relief goals by guiding them through the bankruptcy process.  We work with every client personally, giving each and every bankruptcy case the time and attention it needs. We understand the financial pressures our clients are facing and work to resolve their debt problems in a favorable, cost-effective manner.  Our bankruptcy lawyers have more than 50 years combined experience and are here to help. Call us today at (423) 690-7712 or drop us a note here.

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