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Ways to Rebuild Your Credit After Bankruptcy

Posted on Tuesday, June 17th, 2014    

Over 1.5 million Americans file for bankruptcy every year for a variety of reasons. For those who find themselves in a dark pit of debt, bankruptcy can offer a clean start and set them on the road to debt recovery. However, filing for bankruptcy is an important decision that should not be made lightly.

Before filing bankruptcy, it is important to understand how it will affect your credit. Bankruptcy appears on your credit report for seven to 10 years, depending on the type of bankruptcy you file. After that time, it will either be automatically removed or you can file a dispute to have it permanently removed.

Rebuilding Credit After Bankruptcy

What other steps can you take in the meantime to rebuild your credit? The first step is to manage your current credit by ensuring any errors are properly disputed and removed from your credit report. This will aid in rebuilding your credit accurately. Utilizing the services of TransUnion, Equifax, and Experian, you can receive a current credit report and, under the Fair Credit Reporting Act, dispute any errors. It is important to ensure your pre-bankruptcy debt is properly recorded to begin rebuilding.

Once your credit report is correct, it is also important to keep an eye on it. Maintaining stable employment, conservative spending habits, and paying bills on time are all important steps to continuing to rebuild your credit post-bankruptcy.

Another way to rebuild credit is to apply for a secured credit card that can be used moderately and paid off regularly without a month-to-month rollover balance. Secured credit cards are a good option for those recovering from debt problems because they use the card holder’s savings account as collateral for the credit limit. That way, the card holder does not risk going into debt all over again but still has the option of a credit line. This type of credit card is also much easier to gain approval for than a standard credit card, especially after filing for bankruptcy.

Purchasing a home may be an option for you one to two years after filing for bankruptcy. The Federal Housing Administration, for example, offer loans to those who have filed for bankruptcy, though they maintain specific guidelines for accepting borrowers. If a borrower has “re-established good credit” or has not incurred any new debt, the FHA may insure mortgages for individuals who have filed Chapter 7 liquidation bankruptcy two years previously. Borrowers must, however, be able to demonstrate an ability to manage financial affairs.

When navigating the confusing world of bankruptcy, it is important to know your options and rights in order to rebuild your future. Utilizing the experience of Amerio Law Firm in Sacramento is an excellent way to start your bankruptcy case and set yourself on the path to a debt-free life the right way. Contact the Amerio Law Firm today for a consultation.

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