Life Post-Bankruptcy: Rebuilding Your Credit

If you’ve started the bankruptcy filing process or are even considering it, you may be wondering what life will be like on the other side. At France Law Group, we understand how overwhelming bankruptcy is and want to assure you that there is light at the end of the tunnel.

To be clear, it will take some hard work and dedication on your part. While bankruptcy is a clean slate, it isn’t exactly a “get out of jail free” card. You’ll have to commit to rebuilding your credit, one step at a time. Fortunately, anyone can do it with the right combination of determination, discipline, and patience.

Know what you’re working with

There’s a good chance that your credit was already in subpar shape prior to filing for bankruptcy, but you shouldn’t make assumptions about what your credit report shows. According to the Federal Trade Commission, one in four people have errors on their credit report that negatively impact their credit score. Once your bankruptcy is finalized, request your free annual credit reports. Under the Fair Credit Reporting Act (FCRA), you’re entitled to one free report per year from each of the three credit bureaus.

Negative information is, of course, going to be in your report, but it’s important to make sure that it’s accurate. All debts must be listed when you file bankruptcy, so your credit report should list each of them as either discharged or included in the bankruptcy. If a single account is inaccurately reported, it could further lower your credit score.

Remember that your bankruptcy will remain on your credit report for 10 years and while it wipes out the debts themselves, it doesn’t clean up your report. The good news is that the bankruptcy-related accounts have less and less of an impact over time.

Extra security

Some lenders consider you an extremely high-risk borrower, so you will need to prove your creditworthiness. An excellent place to start is with a secured credit card or loan. In either case, the card or loan is backed by money you deposit. For example, say you get approved for a $300 secured credit card. You’ll be required to pay the card issuer that $300 upfront and then you can use your card to make purchases that draw from that initial deposit. Many card issuers will upgrade you to an unsecured card after a specified length of time using your “credit” responsibly.

Be aware that secured credit cards often come with high interest rates and/or annual fees, but they are one of the best tools available to rebuild your credit. Ideally, you will only need it for a short time anyway.

Don’t be late

When you do get approved for a credit card – or any other type of credit products, for that matter – be vigilant about paying your bills on time. Set up auto-pay if possible, and set reminders on your devices to pay a few days ahead of the due dates, at the very least.

Regardless of where you are in your bankruptcy journey, your story can have a happy ending. France Law Group in Toledo has more than a decade of experience in bankruptcy law and has helped thousands of people through it. Call us at (419) 725-9300 or contact us to schedule a complimentary consultation.

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