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How to rebuild your credit after filing for bankruptcy

For many Indiana residents, carrying some form of debt is simply a part of life. Mortgages, car payments, credit card bills and student loans make up some of the more common cornerstones of the monthly budget. What happens, however, when that debt spirals into an unmanageable figure? For some, filing for bankruptcy—either Chapter 7 or 13—is a viable pathway to debt relief, but such an action does come at a cost.

Successfully filing for bankruptcy means a pretty severe drop in your credit score, and it requires some work to rebuild it, but that shouldn’t necessarily dissuade those struggling with debt from considering it as an option. With the right responsible behaviors, it is possible to get your credit score back into the neighborhood of where it should be, thereby positioning yourself for a much brighter financial future.

Start with a credit report

It’s critical to have a financial strategy to implement the moment that your bankruptcy ends. As you’ll be tasked with basically starting over credit-wise, plan to keep yourself updated on your credit report going forward. Your credit report will offer a record of your accounts, including any delinquent payments or collections. Staying apprised of your credit situation is a good habit to get into for the post-bankruptcy road ahead.

A slow and steady climb

After bankruptcy, you can expect to receive less-than-optimal credit offers. Regardless, you’ll need to start somewhere, so something like a secured credit card could be the way to go. Be sure to make all of your payments early, and try to pay the entire balance each month. It will take time, but after a year or two you’ll see a noticeable increase in your credit score, and you’ll likely begin receiving better offers.

Budgeting and saving for a rainy day

Aside from diligently paying down your new credit accounts, taking a more responsible approach budgeting is also wise. Staying on top of your finances could better enable you to save money, and having a savings account could be vital to preserving your steadily improving credit. Even a relatively small amount of savings could be enough to stop you from using a credit card for an emergency, which would otherwise mean an accumulation of bad debt.

Another important consideration is not entering bankruptcy alone. Hiring an experienced attorney who is familiar with the process could offer you the guidance you need on your journey to debt relief. Bankruptcy can be complicated, and being thoroughly prepared could go a long way toward emerging in a better position on the other side of it.

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Miller Flannery Law LLC
318 Walnut Street
Lawrenceburg, IN 47025

Phone: 812-496-3666
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