Post Bankruptcy: Is It Possible to Rebuild Your Credit?

Many people fear filing for bankruptcy because they think it means that they will never have good credit again – which also means that they will never be able to buy a new car or get qualified for a mortgage to buy a home. This can be a deal breaker for many, even though filing for bankruptcy could help them get the financial relief they need to start over and ultimately achieve those goals in the future.

Fortunately, the idea that bankruptcy will ruin your credit forever is just a myth. So you can get the debt relief you need with bankruptcy and re-establish your credit, helping you to meet your goals faster than if you struggled with debt for years. You just need to know what to do. Here are a few things you can do to rebuild your credit:

Get a Small, Secured Credit Card

A few months after your bankruptcy is discharged, you should be able to apply for a credit card. You are most likely to get approved for cards that have a low limit, such as $200 to $300, as well as cards that are secured by another account, such as a checking or savings account. Apply for one of these cards and use it sparingly. Every month that you pay the bill on time, you will be improving your credit score.

Limit yourself to one card only, and keep the spending at a minimum. Only spend what you can pay off at the end of the month. You don’t want to get into more debt and compound your problem.

Continue Paying on Your Accounts

If you filed for Chapter 7 bankruptcy, you probably were able to keep your car, and you most certainly still have a student loan (if you had one to start). If you filed for Chapter 13 bankruptcy, you have a payment plan to repay your creditors. The point is that you have accounts that you still have to pay, and you can start rebuilding your credit by paying them consistently and on time.

After just a few months, you should notice a slight uptick in your credit score. You should notice a significant improvement within a year, and you should be well on your way to good credit within two years.

Keep Credit Inquiries to a Minimum

Every time a creditor pulls your credit history, it takes a toll on your credit score. If you go on a frenzy of applying for credit cards or other lines of credit, you are going to bring your credit score down even more. Ditto if you check on your own credit score too much. That inquiry will be a hit on your report, which will bring down your score.

Keep your credit inquires to a minimum. Just apply for one credit card at a time until you get approved for one card with a small limit. Then focus on rebuilding your credit for awhile before you pull your score. Don’t open a new phone line or do other things that would require companies to pull your score either.

Filing for bankruptcy doesn’t have to mean the end of good credit. In fact, getting out from under the weight of your debt can help you free up the money to pay your bills and start fixing your credit – much faster than if you had struggled with bills you couldn’t pay. If you are struggling with debts, you should talk with a bankruptcy attorney to learn how filing for bankruptcy might help you. You may be able to get the fresh start that you need to rebuild your life.

My AZ Lawyers can help you understand your bankruptcy options in Arizona. We have attorneys in Mesa, Glenda, Tucson, Avondale, and the surrounding areas. Our experienced lawyers will look at your finances and let you know if Chapter 7 or Chapter 13 bankruptcy could help you. They’ll help you understand the potential financial consequences, as well as the benefits. You could end up freeing yourself of unsecured debts or you could get your debts at a manageable level that you could pay under a structured plan. Call us today to schedule a free consultation and learn about your options.

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My AZ Lawyers

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