Repairing Your Credit After a Bankruptcy Claim

When it comes to repairing your personal finances, the process of claiming bankruptcy can be overwhelming and potentially damaging to your credit score. Although many candidates for the bankruptcy process already have a tarnished credit rating due to their financial misfortunes, a bankruptcy claim can cause lasting damage. In fact, a bankruptcy can stay on your credit file for up to 7 years, during which time it can be nearly impossible to obtain a loan or other form of consumer credit. Although your credit can take a beating during the process, there are some things you can do to begin the repair process. Even though it’s commonly assumed that nothing can be done to repair your credit until the bankruptcy has been removed from your record, there are some strategies that can be used to get things back on track, or at lease headed that way.

There are no secrets when it comes to repairing your credit; in fact, all you need to do is to stay away from the behaviors and activities that originally led you toward filing for bankruptcy. Rather than missing payments and avoiding debt obligations, you should focus on meeting those obligations. The following article will outline some simple strategies that you can use to begin repairing your credit today, regardless of where you find yourself in the bankruptcy timeline.

As mentioned previously, there is no magic bullet for getting your finances back on track. For many people, the first step toward financial repair occurs when the decision is made to claim bankruptcy. Although the words “repair” and “bankruptcy” may seem a bit odd when paired together, this is truly what you are doing when heading down this road. And while it may seem that your credit will never be repaired as a result of the bankruptcy process, there are some things you can start doing today to make it a reality.

1.    Make On-Time Payments – when you think about what got you into this mess in the first place, it likely had much to do with your inability to repay your debts. Whether this act was intentional or not matters little. Instead, what matters is that you are able to reverse this trend. Restoring your credit during and after a bankruptcy is difficult, though it’s possible through consistent, on-time bill payments. While the repair process could take years, it’s important that you begin to change your habits now.

2.    Choose Your Debts Carefully – although you may think it best to avoid debt like the plague after your bankruptcy, you need to have some type of credit to prove that you have learned from your past mistakes. A new credit history cannot be built without new data, so it’s important that you begin building a new database. Of course, you will want to do so carefully. Rather than taking out a large loan, start charging small items like groceries or clothing, with the idea that you can pay these smaller debts down. Your ability to consistently make your payments over months and years is what will allow your credit score to rise over time.

As part of going through the bankruptcy process, you will be required to undergo mandatory credit counseling. This counseling can be eye-opening in terms of helping you to understand why your finances drifted off track. Although these sessions can be helpful before initiating a claim, it’s important that you don’t lose focus during and after the claim has been processed. There is something to be said regarding the benefits that can be derived from speaking to a financial professional about your money issues. Whether or not it’s something as simple as preparing a household budget or something more complex like planning for retirement, consulting with a professional can provide you with perspective that you never had before.

Although seeking advice from a professional is certainly optional, doing so can allow you to make better financial decisions. Finding a professional is easy to do by using the internet or by simply contacting some of the major firms within the area you live. Once you find someone that you are comfortable with, they can provide you with a rundown of their services, and may also be able to provide you with a list of clients that they’ve helped through their advice.