Re-Establishing Credit

How to Reestablish Your Credit After Filing Chapter 7

Whether you have already filed for bankruptcy or you are seriously considering doing so, it’s important to understand the pros and cons of both. If you have filed or are filing for Chapter 7, the pros will be that creditors cannot come after you for the debt you owe. Bankruptcy is a way for you to start with a clean slate. However, the con for filing for bankruptcy is that it’s going to have a devastating impact on your credit. But this does not mean that all hope is lost for your financial future. Here are a couple of tips for reestablishing yourself after bankruptcy.

The first thing you should do is organize your finances. Write down how much money you are spending, how much you are making and ideas on how you can build your credit score. Even though it will cost you, it’s a wise choice to work with a financial professional to help get you back on track. A financial professional can teach you how to manage your money and make smart investment decisions. This will help you secure your financial future so that filing for bankruptcy is never a road you’ll have to go down again.

Obviously if you want to build your credit score, you need to pay each and every bill on time. Start to slowly add credit (perhaps with one or two credit cards) to prove to creditors that you are no longer a risk. While you will face higher interest for loans, over time, you can request that your rate be lowered as you begin to get your credit back on track.

The biggest mistake people make after filing bankruptcy is thinking that they can quickly build their credit back up. This is not the case. Building your credit and establishing a good financial name for yourself usually takes a few years. Remember, bankruptcy stays on your credit report for seven years. You are considered to be at risk during this time.

So if you’re facing bankruptcy or have already filed, consider taking these steps to ensure a financially secure future. It is possible to reestablish yourself after bankruptcy—it just takes a little effort and a lot of patience.