Guide to Rebuilding Credit After Bankruptcy

Filing for bankruptcy represents a financial setback, but it also brings the promise of a brighter financial future. After you receive a discharge of your debts, you can begin rebuilding your finances and strengthening your credit history. Your bankruptcy lawyer can answer your questions about life after bankruptcy.

Prioritize Your Bills

In the wake of a bankruptcy discharge, sticking to a budget has never been more important, particularly if you’re following a Chapter 13 repayment plan. You should have a clear idea of where each dollar is going every month. Paying your bills on time is your top priority, since on time and in full payments will help restore your credit history. This may mean that you might need to cut non-essential expenses.

Open a Secured Credit Card

Visit a local bank or credit union to apply for a secured credit card account. You can do this as soon as your debt is discharged. You’ll need to deposit money in the account. Then, the financial institution will issue a line of credit for between 50 and 100 percent of your deposit. Use the secured credit card wisely. In time, you’ll qualify for a regular credit card.

Create an Emergency Fund

Life is full of unexpected surprises and not all of them are pleasant. If you require care at an emergency room, your car breaks down, or your child’s dentist declares that he or she needs braces, these unexpected expenses can easily derail your finances and might even lead to another bankruptcy. To avoid future financial pitfalls, begin establishing an emergency fund as soon as possible.

Monitor Your Credit Reports

Everyone is entitled to a free copy of each credit report every 12 months and you should take advantage of this. Some experts recommend requesting just one of the three credit reports every four months, which allows you to continually monitor your credit history throughout the year at no charge to you. In doing so, you can detect mistakes and possible identity theft that could compromise your credit history.

Since 1990, the bankruptcy law firm of Cutler & Associates, Ltd. has provided comprehensive and compassionate legal advocacy services to clients in the Chicago area. Our bankruptcy attorneys are dedicated to helping our clients move forward with their lives after achieving a discharge of debts.