Life After Bankruptcy: Raising Your Credit Score

While most believe that bankruptcy has a negative connotation, it is actually designed to help you get your finances in order. Maybe you spent more than you could afford or acquired a few too many credit cards to the point you could no longer keep up.

Responsibly managing finances is not easy and not something everyone can do easily. That is why bankruptcy exists. It gives those facing difficult financial problems the opportunity at a fresh start and virtually a clean slate.

While filing for bankruptcy can help you rid yourself of debt, it also comes at a price. You might lose valuable property or other assets or, more commonly, your credit score will be greatly affected. If you have filed for Chapter 13 bankruptcy it will remain on your credit report for seven years and a Chapter 7 bankruptcy will remain on your credit report for 10 years. Additionally, filing for bankruptcy usually results in a credit score loss of 200 points or more, which can be difficult to bounce back from. Still, if you remain diligent and correctly manage your credit following your bankruptcy, you can raise your credit score back up in the 700s in four or five years.

With that in mind, there are plenty of ways to improve your credit score after a bankruptcy.

A good place to start is to add new, positive credit. An example of this would be getting a secured credit card, which requires a cash collateral deposit that serves as the credit line for that account. So if you put in $1,000 into the account then you are able to charge up to $1,000.

The same goes for loans. If you are looking to get a loan then it should be a secured installment loan, which is also protected by a collateral or asset of some type.

Another step to raise your credit score is to make sure you make all of your payments on any existing debt on time. This means paying before the due date so as to avoid negatively impacting your credit score. It also helps to spend well under your available credit limit. Overspending could keep you from comfortably being able to pay what you owe by the time it is due.

When it comes down to it, every bankruptcy situation is different and will impact different people in different ways. It would be in your best interest to consult an experienced bankruptcy attorney to figure out what could work best for you.

The Law Office of Joel R. Spivack Esq. has handled bankruptcy-related cases for over 30 years. Attorney Joel R. Spivack’s experience and expertise could help keep you get on the right financial path from here on out. Contact us today at 856-488-1200 for a free consultation.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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