Rebuilding credit after Chapter 7 or Chapter 13 bankruptcy

One of the greatest fears felt by those filing Chapter 7 or Chapter 13 bankruptcy is that the filing will forever damage their credit score. Though it’s true bankruptcy can negatively impact a credit report, the change is by no means permanent or impossible to recover from with future financial activity.

A credit score can recover after filing for bankruptcy and there are a number of smart financial resources you can utilize to begin rebuilding a credit report after a bankruptcy filing. Bankruptcy is not and should not be perceived as a financial failure; burdensome debt can come from any number of causes and many are not due to financial missteps on the filer’s part.

Beginning to rebuild credit

After filing Chapter 7 or Chapter 13 bankruptcy, your credit score will take a hit in the initial aftermath. In all actuality, it’s possible that someone filing for bankruptcy was already in a precarious situation with their credit report long before the filing. Missed payments and mounting debt don’t help a fledgling credit score, so a bankruptcy filing is often not the first knock on a credit report.

There’s a common misconception that creditors won’t issue new lines of credit to someone who has filed for bankruptcy in the past. This is simply untrue as a number of resources exist specifically to help rebuild credit.

Those who filed for bankruptcy can begin to rebuild credit by utilizing secured credit cards, credit builder loans and signing onto an existing account as an authorized user.

It’s important to note that taking on new lines of credit could be a risky choice after bankruptcy, so consult financial and bankruptcy experts personally to determine the best course of action in your situation.

What to watch for after a bankruptcy filing

There are a number of important considerations to prioritize after filing for Chapter 7 or Chapter 13 bankruptcy. You will need to watch your spending, keep up with repayment plans or paying other bills and keep track of your credit reports. Bankruptcies stay on reports for 10 years for Chapter 7 and seven years for Chapter 13. You can still work to rebuild your credit and increase a score while these notes stay on the report.

A bankruptcy filing does not spell the demise of a good credit score. Getting past the effects of bankruptcy requires wise financial decisions and the help of bankruptcy professionals is worth seeking.

Take the necessary steps to protect your financial wellbeing. You can come back after a bankruptcy filing to work toward a more secure, stable financial future.

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