• 30
  • September
    2011

Many people believe they will not be able to get credit after filing for bankruptcy. This is one of the many bankruptcy myths out there. While a bankruptcy will appear on your credit report, it will not be there forever. Furthermore, there are steps that you can take to improve your credit score after bankruptcy.

If you are in debt, Boston bankruptcy lawyers are ready to help you decide what your next steps should be. Bankruptcy may be the right choice to start anew and begin building your more positive financial future.

How Long Will Bankruptcy Stay on My Credit Report?

Personal bankruptcy can stay on a credit report for 10 years. During that time, it may be more difficult to get credit or a loan. However, bankruptcy also allows you to work toward managing your finances and becoming a responsible borrower.

Through Chapter 13 bankruptcy, a debtor creates a repayment plan where he or she pays back creditors over three to five years. In Chapter 7 bankruptcy, a debtor's assets are liquidated (sold) in order for the debtor to have a "fresh start." If you are considering filing for bankruptcy, note that you must also go through credit counseling. Credit counseling can help you understand how to improve your credit and how bankruptcy will affect your credit report.

How Can I Recover Credit After Bankruptcy?

Some steps you can take to help improve your credit score after bankruptcy include:

  • Create and follow a budget. Calculate your income and spending amounts. Determine how much money you must spend on necessities and what money you can save each month.
  • Pay all of your bills on time. If you have trouble paying your bills, contact your creditors as soon as possible to develop a modified payment plan.
  • Consider applying for high-rate, secured credit cards. However, make sure to pay the balance in full every month (ideally ahead of time).
  • Watch for inaccurate information on your credit report. Some debts may stay on your credit report even though they were discharged during bankruptcy proceedings. If this is the case, contact the credit reporting companies involved and send them information and documents that support your claims.

The most important thing to keep in mind is that bankruptcy is not the end of the road; it may, in fact, be the beginning.

Source: Federal trade Commission, "Building a Better Credit Report," Aug. 2011.