Get the Red Out: Rebuilding Credit After Bankruptcy

August 03, 2012

Get the Red Out: Rebuilding Credit After Bankruptcy

Some people hesitate to seek out the fresh financial start that bankruptcy can offer because they fear they will never undo the damage that bankruptcywill do to their credit scores. However, what many do not realize is that continuing to struggle financially and missing payments on bills may ultimately be more damaging to credit than bankruptcy. People can take steps to rebuild their credit after filing bankruptcy and come out in a better financial position than before filing.

Credit Check

One of the most important steps a person can take to begin the road to financial recovery is to request his or her own credit reports to ensure the accuracy of the reports. All of the debts discharged in bankruptcy should be at a zero balance so they are no longer affecting a person's credit score. If the report is inaccurate, the person should contact the reporting agency to amend the reports.

Existing Obligations

One of the best ways to rebuild credit is to make regular timely payments on accounts. By paying existing obligations such as rent and utilities on time and in full, people can build positive credit history. Not all debts are eliminated in bankruptcy, so making payments on a repayment plan for such things as back taxes, unpaid child support and student loans will also help improve credit.

Secured Credit Cards

People may also want to consider secured credit cards as a way to rebuild credit. With a secured credit card, the holder deposits a sum of money equal to the card's limit with the issuing bank as collateral in case the holder fails to make payments. A person then can use the card like any other credit card. Using these cards and paying the balance off each month will build positive credit history.

People should check to see if the issuing banks report payments on secured credit cards to credit reporting agencies before obtaining such cards.

Talk to a Lawyer

Making the decision to file bankruptcy can be difficult. People are often unsure the impact such a step will have on their lives. If you are struggling financially and are wondering if bankruptcy is a good option for you, meet with a qualified bankruptcy attorney who can discuss your situation with you and offer you guidance.

Article provided by Ryan Law Offices
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