How to Rebuild Your Credit Through Bankruptcy


If you are dealing with unmanageable debt, you may find yourself struggling to make the monthly payments needed to get back on the right financial track. Worse yet, the more debt you accumulate, the harder it becomes to cover your expenses and pay off the debt at the same time. As time goes by and your debt problems only get worse, you will face another major issue: your credit could be ruined.

Too much debt now, combined with an inability to pay off that debt, will likely result in your credit score plummeting. Your credit score is used by lenders to determine whether you are a “good risk.” Poor credit will make it very difficult, if not impossible, for you to get a mortgage or secure financing for a home loan, rent an apartment, buy a car, or even qualify for a credit card in the future.

File for Bankruptcy to Start Improving Your Credit Score

Filing for bankruptcy may be the best, and quickest, way to start fresh and rebuild your credit. Although many people mistakenly believe that bankruptcy will destroy their credit – bankruptcy will lower your credit score in the short term – a bankruptcy filing will also give you a chance to finally get out from underneath a mountain of debt so that you can actually start to improve your credit.

Additionally, the reality is that many lenders may view you more favorably after you file for bankruptcy. That’s because bankruptcy reduces your debt-to-income ratio. Beyond that, the fact that a person can typically only qualify for Chapter 7 bankruptcy once every eight years means that you could be more desirable to potential lenders.

You might have to pay higher interest rates if you seek a loan right after filing for Chapter 7 or Chapter 13 bankruptcy, but at least you will be in position to secure the loan in the first place. Moreover, many Chapter 13 bankruptcy petitioners can rebuild their credit in short order by making regular payments and refinancing out of bankruptcy.

Of course, it may not be in your best interests to borrow money immediately after petitioning for bankruptcy. It makes sense to re-establish your credit in the months following a bankruptcy so that you can secure better terms, including a lower interest rate, on any loan.

Steps to Take After Filing for Bankruptcy

Your bankruptcy could stay on your credit report, and remain viewable by potential lenders, for a period of 10 years. That’s why it is important for you to take steps to rebuild your credit after filing for bankruptcy. There are a few things you can do to improve your credit score in the immediate aftermath of filing for bankruptcy.

First, consider getting a secured credit card through your bank. You will need to provide the funds for the credit card in advance, as well as pay application and processing fees, but your credit score will soon rise.

Another way to improve your credit after bankruptcy is to buy a car. It may take some time before you are able to qualify for car financing, but you may want to consider taking advantage of this option when you do qualify. That’s because you will be establishing good credit history through regular payments.


If you are struggling with debts, you need to speak with a qualified bankruptcy and debt relief attorney immediately. Joel R. Spivack, Esq., is an experienced bankruptcy lawyer who can help you get out of debt. Contact Mr. Spivack today to schedule a consultation.

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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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