How to Repair Your Credit After Bankruptcy
Kansas City Bankruptcy Lawyer on Improving Your Score
When considering personal bankruptcy, many people worry about the negative impact it will have on their credit score. Many fear they will not be able to qualify for home loans or other lines of credit after bankruptcy. However, it is important to remember that bankruptcy is actually the first step toward improving your credit in the future. If you are struggling with debts that you cannot repay, then your credit score is probably struggling, too. Missed payments, foreclosure proceedings and maxed out credit cards all negatively affect your score. The best and fastest way to improve your credit is to first get rid of that unmanageable debt.
At the Sader Law Firm, we have helped many Missouri families get out from under unmanageable debt through bankruptcy. But our work does not stop when your bankruptcy ends. We can help you devise a post-bankruptcy financial strategy and can answer your questions about credit repair. If you need a Kansas City bankruptcy lawyer, call our law firm today. Otherwise, learn how you can improve your credit after bankruptcy by following these tips from our attorneys.
Tips on Rebuilding Credit After Bankruptcy
After your Chapter 7 or Chapter 13 bankruptcy is complete, your credit score will be low. However, you can start improving your credit almost immediately by following these financial tips:
- Make a budget. Use what you learned during credit counseling and set up a monthly budget for yourself. This will help you manage what you still owe and avoid late payments. Be sure to account for all of your remaining expenses.
- Make payments on time. Stability is very important to your credit score. Even the debts you cannot discharge in bankruptcy, like your student loans, will help improve your score if you make your payments on time.
- Show that your situation is stable. Avoid skipping from job to job if possible, and try to stay in the same home. These things show that you are secure enough in your personal life to handle a future loan or mortgage. Plus, stability helps bump up your credit score.
- Start saving money for emergencies. After bankruptcy, you will likely be able to keep more of your income. Even a small savings account can help you avoid missing payments if you have an emergency, like surprise medical bills.
- Monitor your credit score. You should check your score at least annually on a free credit reporting website. Always dispute errors to your score and keep track of how your credit is improving.
- Borrow as little as possible. Creditors consider the reasonableness of your request and your financial risk. Do not try to borrow as much as you can – instead borrow as little as necessary.
- Beware of credit repair agencies. The best way to rebuild credit after bankruptcy is to spend money wisely, not pay someone for services that you can do yourself.
How Long Does It Take to Rebuild Credit After Bankruptcy?
Chapter 7 bankruptcy will stay on your credit report for 10 years after the end of the process. Chapter 13 bankruptcy will be reported for seven years after your repayment plan ends. After that time, the bankruptcy will fall off your report. This means that no lender or agency that requests your report will be able to tell that you ever filed for bankruptcy. However, you can rebuild your credit score while a bankruptcy still appears on your report. In fact, you may be able to regain a good score only a year or two after bankruptcy.
In order to build up a good credit score quickly, it is important that you make all payments on any remaining debt in a timely manner. The reason is that, after bankruptcy, any late payments will doubly affect your score, possibly undoing all of your hard work. If you miss any monthly payments, it will take you much longer to improve your credit after bankruptcy.
Questions about Rebuilding Credit? Call for a Free Consultation with a Kansas City Bankruptcy Lawyer
If you are worried about dealing with bad credit after bankruptcy, the attorneys at the Sader Law Firm can help. It will take some time and patience, but repairing your credit after bankruptcy is probably easier than you think. We can explain the bankruptcy process and give you advice about repairing your credit and managing your finances after your debts are discharged. Contact us online or call our office to schedule a free consultation with a Kansas City bankruptcy lawyer today.