Understanding Credit After Bankruptcy

: Reese Baker & Associates

  Filed under: Credit

Understanding credit after bankruptcyWhile declaring bankruptcy does get you out of debt, it does have a detrimental effect on your credit. Credit after bankruptcy is not going to look very good. First off, let’s come to terms that your credit had to already be in a bad place for you to actually consider filing for bankruptcy. If you are eligible for a chapter 7, that means your credit is in tatters, to begin with. The bankruptcy filing is going to wipe out most of your debts and give you a financial clean slate of sorts. Understanding credit after bankruptcy can help you put your best foot forward.

Understanding Credit After Bankruptcy

There is a common misconception that bankruptcy destroys your credit and that there is no recovery after it, that is not true. Here are a few pointers that will help you rebuild your credit after a bankruptcy.


  • Take loans

    The idea seems counter-intuitive, but you need to understand that you have zero debts, so that can actually be a good thing. Also, you cannot declare another bankruptcy for 8 years, so the creditors would not really mind giving you a light loan.

  • Repay said loan

    Now that you have a line of credit opened up to you, make sure you rebuild your ratings by starting to make timely payments. Never miss out on any payments.
  • Effect will wane

    The bankruptcy will stay on your credit sheet for 10 years, but the effect will wane away if you start afresh and add positive points on your sheet. You have a clean slate to start over, make sure there are no black marks on it.

  • Choose the right type of credit

    The bankruptcy is a major red flag that all creditors will see and think of you as a risky borrower, so you need to find loans that work.

It will take a few years, but it is possible to regain your financial stance in due course of time.