13th Feb 2018

Many people have the belief that once you file for bankruptcy, you will never have credit again. Thus, you will never be able to purchase a car, home or even have a credit card. This belief is simply untrue. Quite often, I see people who come to my office and need to file bankruptcy to resolve some other issues, but have this false belief of never being able to purchase on credit again. The truth is that you can rebuild your credit after bankruptcy, making it possible to buy a car, purchase a home, etc.

The question then becomes “what can I do to help rebuild my credit after banrkuptcy?” There are several things that you can do to help your credit score improve after bankruptcy. I will go through some of the top tips below.

First, you need to complete your bankruptcy case and receive the discharge in bankruptcy. The discharge is the legal term for wiping out the unsecured debts on your credit report. It will change all those credit card and medical bill balances to zero showing that nothing further is owed to them. This discharge will likely improve your credit score immediately because it helps your debt-to-income ratio, which is a big factor in determining your credit score.

Second, you need to open a few new credit accounts after your bankruptcy is complete. You may ask how you can do that if you just completed a bankruptcy, but the truth is that there are several lenders out there willing to give you small limit credit cards once a case is complete. You can also open a secured credit card where you have the money in your bank account back up your credit card limit. Either way, you can use the new credit card to make one or two purchases each month, then pay off the credit card in full by the end of the month. This will be something positive being reported back to the credit report.

Third, make sure that you do not carry over balances from month to month. You do not want to start building up a lot of debt again after bankruptcy. For sure, you should never owe more than 25 percent of your available credit limit.

Fourth, make sure to make your payments ON TIME each month. If you start accruing late notices on your credit report, it is going to hurt your score.

Fifth, you can help your credit by maintaining good credit with existing services such as cell phones, gym memberships, car insurance, or cable bills. If you can show continued on-time payment of these services, it can help show you are credit worthy to a future lender.

So, do not fear. You will be able to rebuild your credit after bankruptcy. If you have any questions about these issues, please give me a call. I’ll be happy to sit down with you for a free, no obligation consultation to evaluate your situation and inform you of your different options on bankruptcy and rebuilding your credit. Please contact me at 281-847- 4345 or rkemsley@kemsleylaw.com. I look forward to hearing from you soon.

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