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Rebuilding credit after a bankruptcy filing

Too many misconceptions exist regarding life during and after a bankruptcy filing. Deciding to file for Chapter 7 or Chapter 13 bankruptcy is not the end of your financial health and wellness. On the contrary, bankruptcy and debt reorganization can be the most productive financial decision for many struggling with repayment of past debts.

One key concern many hold about filing for bankruptcy is that is does permanent damage to a credit score. If a person fears they can never recover from a past financial challenge, it makes it unlikely that they will consider all their options for getting out from under an intense debt accrual.

For those worried about your credit score after bankruptcy, you don’t have to worry about never recovering from the filing. In reality, many people who are facing the possibility of bankruptcy are already in a poor credit position meaning there is an existing risk to their score. When it comes to your credit score, filing for bankruptcy may help in the long run.

Timeline to rebuild credit

Every person’s credit situation is unique when entering and completing a bankruptcy process. The main concern about a credit report tends to be that it reflects the bankruptcy filing and may deter lenders from working with the filer. In fact, Chapter 7 bankruptcy stays on your report for 10 years and Chapter 13 stays for seven years. That is a substantial amount of time, but it’s by no means a lifelong impact on your report.

Once this time passes, your report no longer shows the past filings. Even while the filing is on your report, it’s not impossible to begin rebuilding credit. Various methods for rebuilding credit over time include adding new credit with secured cards or loans, using credit cards responsibly and sparingly and making all your payments on time.

Wise future financial decisions

After bankruptcy, the most important thing to do is to prioritize your financial future by shirking past patterns. Oftentimes people end up filing for bankruptcy due to the burden of medical bills or other unforeseen debts. No matter how the situation developed, it’s important to work to avoid past mistakes and make wise future decisions. Each person needs to consider what strategies will work for their situation, so some lending and spending options may not work for every person.

When it comes to rebuilding after a bankruptcy filing, you don’t have to go it alone. Consider the financial, professional and legal resources for the bankruptcy process as you plan for your financial future. Filing for bankruptcy is by no means the end of your financial life. Think ahead to your future goals as you plan for the next step in dealing with debt.

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