Q. How do I Build Credit After Bankruptcy?

A. Bankruptcy is an inevitable fact of life for many consumers today.  Although the economic crisis mainly is behind us, it has left in its wake a portion of society struggling with debt.

Even though most people may have been perfectly qualified for the funds for which they were approved, circumstances could change suddenly and mean a drastic change in lifestyle and how they look at their financial life.  Loss of employment, illness and other factors are beyond everyone’s control.

Bankruptcy is available in two ways: Chapter 7 and Chapter 13.  A chapter 7 bankruptcy means the court will forgive most debts you have, except for federal & state income tax and student loans.   A Chapter 13 bankruptcy means a schedule of repayment to the creditors, most often at a negotiated amount worked out between the debtor and the courts.  Both bankruptcy types will stay on your credit report for 7 years and will lower your credit rating.

The best thing to do if you have filed Chapter 13 is to look for a low interest credit card.  This is a great way to use a credit card to rebuild credit. These will enable you to purchase items at a small amount, paying the total balance due when the bill comes.  Try to accomplish this consistently to establish a pattern of paying on time and that you can afford what you are purchasing.

Chapter 7 bankruptcies are a little trickier to work around.  You are virtually unable to be eligible for any amount of credit for about a year, maybe even two.  But once you are able to find one, ask for a minimal amount so that you are able to pay the balance off as soon as the bill becomes due.

It is time consuming and will take a while, but you can rebuild your credit after filing bankruptcy, and improve your credit score.

We didn’t file bankruptcy – but came close. Instead we used a credit repair attorney to get our finances back on track.