Just because you filed for bankruptcy does not mean that your credit is ruined forever.  Despite popular belief, there are ways to rehabilitate your credit score after your bankruptcy action is finished.  By taking the right steps to rebuild your credit, you are in a better position to be approved for loans rather quickly after you file for bankruptcy.  The key to success in this regard is to demonstrate post-bankruptcy that you are capable of managing credit.   With this in mind, now is a better time than ever to start laying the groundwork for creating a healthy financial future.  Accordingly, the following are some tips you should consider once your debt is discharged:

  1. Review your credit report.  Unbeknownst to many people, rebuilding your credit after filing for bankruptcy is not impossible.  Despite the fact that your bankruptcy action will remain on your credit report for up to ten years, you can start gaining creditworthiness in as little as a year after your bankruptcy is finalized.  As such, the first step you should take is to closely monitor your credit report to make sure all of your accounts have been closed.  After your bankruptcy, all of your accounts should show a zero balance.  If errors on your credit report are not corrected, it could delay your ability to qualify for credit.
  2. Establish new lines of credit.  Credit card companies often target those who completed bankruptcy actions since upon discharge, one’s debt to income ratio automatically decreases.   For instance, most credit card companies offer secured credit cards to individuals after they file for bankruptcy.  It is highly advised that you make sure to pay your balance on time and in full at the end of each month in order to demonstrate financial responsibility. 
  3. Consider getting an installment loan.  In the event that you need to purchase a car, furniture or appliances, an installment loan may be a good way of rebuilding your credit.  While installment loans may charge high interest rates for a certain period of time, the best way of mitigating these rates is to obtain very small loans.  That way, you can pay off your balance every month and establish that you are capable of effectively managing debt.
  4. Take baby steps.  When rebuilding your credit after a bankruptcy action, it is important to be patient and ease yourself back into the process of using credit cards and other forms of credit.  Also keep in mind that many creditors prey on people who file for bankruptcy.  Specifically, with offers that seem to be too good to be true, they probably are.  Meaning, credit card companies that promise to give you credit after a bankruptcy often charge huge interest rates and other outrageous fees.   Therefore, it is recommended that you be wary of credit offers. Your focus should be on rebuilding your credit, not taking on more debt than you can handle.

Contact My Kansas City Law Firm for a Free Consultation

For more information on your debt relief options, contact my office today for a free consultation.  I will be sure to answer all of your questions and assist you in determining whether bankruptcy is right for you.  Don’t wait until it is too late to take control and regain your financial freedom.