If you are considering filing for bankruptcy, you may be concerned about the fact that a bankruptcy filing will remain on your credit report for 10 years, making it more difficult to obtain housing, loans, and credit accounts in the future. However, chances are that if you are considering bankruptcy, your credit is already in bad shape. Filing for bankruptcy not only eliminates many of your current debts, it also gives you the opportunity to start rebuilding your credit.
Strategies for Improving Your Credit
Though rebuilding your credit can take time, it is possible with a smart approach. Here are some things you can do to work toward improving your credit score and demonstrating to lenders that you are reliable:
Review your credit report. One of the first steps toward rebuilding your credit is understanding where it currently stands. After bankruptcy, you can expect to see your filing on your credit report, as well as the elimination of your outstanding balances for many credit accounts, including mortgages, vehicle loans, and credit cards. If you find outstanding balances that should no longer be there, you can work with a credit bureau to ensure your report is accurate.
Pay any remaining obligations on time. Though many types of debt are dischargeable in bankruptcy, student loans are not, so you may need to continue making regular, on-time payments to avoid further damage to your credit. You should also make sure to pay any state and federal taxes, child support or spousal support, rent, and utility bills in your name.
Consider a secured credit card or credit-builder loan. Both of these options offer benefits for those recovering from bankruptcy who may struggle to qualify for other types of loans or credit cards. Usually, they require you to make a deposit that you can borrow against, and they have comparatively higher interest rates and fees. If you can demonstrate financial responsibility by making payments toward these accounts, you may be able to qualify for more favorable credit accounts as time goes on.
Keep outstanding balances low. As you start to qualify for loans and credit cards, do your best to avoid repeating the past by keeping your account balances manageable. This means ensuring that you do not spend beyond your means and possibly even making a plan to pay off your entire balance each month.
Contact a Rockland County Bankruptcy Attorney
At the Law Offices of Robert S. Lewis, P.C., we understand that filing for bankruptcy is a scary thought for many people. We can help you decide whether it is the best choice for you and guide you through the process so that you know what to expect and you are well-positioned for future success. For a free consultation, contact our Hudson Valley area bankruptcy lawyer at 845-358-7100 today.