How to Re-Establish Credit Following a Bankruptcy Filing
You’ve taken the “plunge” and filed for bankruptcy. In fact, you’ve completed your bankruptcy and have earned your discharge. You are now, relatively speaking, debt free but you are also credit poor.
Following a bankruptcy, most people take the position that they will pay for everything in cash as they move forward. Put another way, they swear off obtaining any lines of credit in the future. This is not a good idea and likely not a feasible plan.
Establish 3 or more lines of credit… and properly manage them
The important thing to remember is that following a bankruptcy filing, you need to “show the world” that you have learned from your past mistakes and can now properly manage your lines of credit. To do this, one needs to re-establish their credit. What I have learned over the years is the quicker one can establish three (3) or more lines of credit and properly manage them, the sooner their credit score will rise.
Avoid Applying and Getting Declined
Although a bankruptcy filing can remain on a credit report for no more than ten (10) years, the ill-effects of the filing will be greatly lessened due to the new lines of credit being opened and properly maintained.
In many instances, my Chapter 7 bankruptcy clients will receive multiple credit card offers within six (6) months of receiving their discharge order (meaning the bankruptcy case has been successfully completed and closed). What you don’t want to do is apply for new credit shortly after completing your bankruptcy and be denied. This will only hurt your credit score even more. Instead, you should wait until you receive a pre-approved line of credit or credit card and then apply for it.
Rebuild Credit Trust Slowly
Following a bankruptcy filing, you will not be afforded a high credit amount and that is fine. Remember, you are beginning the process of re-establishing your credit. Proceed with this rebuilding process slowly and cautiously. Following your bankruptcy you may still be left with auto loan/lease payments. This type of monthly payment obligation will also help you re-establish your credit. In some instances, I have clients who report their credit score has significantly increased one (1) year after filing when compared with their credit score just prior to the filing of a bankruptcy petition.
How We Can Help With Bankruptcy and Beyond
At the firm Reinheimer & Reinheimer, we counsel you not only about bankruptcy but also about things such as your life after a filing. Choose a law firm that cares and is willing to go the extra mile to get you back on track and to keep you moving in the right direction after your bankruptcy is completed. Call for your free consultation today and take control of your life and your future.
