How to Fix My Credit Score After Bankruptcy

January 17, 2023

Are you thinking about declaring bankruptcy or already in the process? If so, it’s vital to understand how a successful bankruptcy petition can affect your credit score and your financial future. For starters, bankruptcy can significantly impact your credit score, and it may be difficult to obtain credit or loans in the future. 

However, bankruptcy can also provide much-needed debt relief and a fresh financial start. In addition to bankruptcy protection, other debt-relief options are possible, like a debt consolidation loan, debt negotiation, debt settlement, and debt collection lawsuit defense. 

These debt relief options can help you to repay debts and improve your credit score, but they may not be suitable for everyone. 

If you file for bankruptcy, it’s recommended to work with a bankruptcy lawyer to ensure the process goes smoothly. A bankruptcy lawyer can help you to understand the bankruptcy proceedings, prepare for your bankruptcy case, represent you in bankruptcy court, and assist with the bankruptcy discharge process.

Contact us today to schedule a free consultation with a Floria bankruptcy attorney. 

Do All Bankruptcies Have Equal Impact?

There are several types of bankruptcy, each governed by bankruptcy laws under the U.S. bankruptcy code. With that in mind, not all bankruptcies have the same impact on your credit score. 

The most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also known as a “liquidation” bankruptcy, involves the sale of your non-exempt assets (typically facilitated by a bankruptcy trustee) to pay off your unsecured debt.

Chapter 13 bankruptcy, also known as a “reorganization” bankruptcy, involves creating a repayment plan (usually with a monthly payment requirement) to pay off your debts over three to five years. While Chapter 13 bankruptcy can also hurt your credit score, it is generally less severe than Chapter 7 bankruptcy.

It is also worth noting that the length of time a bankruptcy remains on your credit report can vary depending on the type of bankruptcy you file. Chapter 7 bankruptcy stays on your credit report for up to ten years, while Chapter 13 bankruptcy stays on your credit report for up to seven years.

How Soon Can You Improve Your Credit Score After The Bankruptcy Process?

It is a long process, but it’s possible to begin improving your credit score after you file bankruptcy. While bankruptcy will remain on your credit report for several years, you can take steps to rebuild your credit and improve your score over time.

One of the most effective ways to improve your credit score after bankruptcy is to make all of your payments on time. This includes any debts you are still responsible for, such as a mortgage or car loan, and any new credit accounts you may open. Paying your bills on time can demonstrate to lenders that you are a responsible borrower and are working to improve your credit.

Another effective way to improve your credit score after bankruptcy is to reduce your credit card balances. Credit utilization, or the amount of credit you use relative to your credit limits, is a key factor in your credit score. Reducing your credit card balances can improve your credit utilization and boost your credit score.

Returning to Good Credit After Bankruptcy Filings

Bankruptcy can have a significant impact on your credit score. However, it is possible to return to good credit after the bankruptcy process. Here are a few steps to improve your credit score and return to good credit.

Seek credit counseling

Credit counseling can help you understand your financial situation, develop a budget, and create a plan to pay off your debts. Many credit counseling agencies offer free or low-cost services, and you can find a reputable agency by contacting the National Foundation for Credit Counseling or the American Bankruptcy Institute.

Enroll in an online credit counseling course

An online credit counseling agency can help you learn more about personal finance and how to manage, save, and borrow money. Many free online credit counseling courses can help you rebuild your credit after a straight bankruptcy or repayment plan bankruptcy.

Create a personal budget plan and stick to it

Over time, astute financial planning can help repair low credit scores. That’s true regardless of the type of bankruptcy filed with the United States courts. By creating a realistic personal budget and debt repayment schedule (especially for debts not included in bankruptcy, like child support, certain tax debts, and student loan debt), you can set yourself up for future financial success.

Pay creditors on time

By paying your bills and remaining debts on time (i.e., an auto loan, student debt, loans for medical bills, etc.), you can demonstrate to lenders that you are a responsible borrower and that you are working to improve your credit.

Apply for a secured credit card

Unlike unsecured debts, a secured credit card is a type of credit card debt that requires a deposit as collateral. By making regular, on-time payments on a secured credit card, you can build up a positive credit history and improve your credit score.

Consider debt consolidation

A debt consolidation loan allows you to pay off multiple outstanding debts by combining them into a single loan with a lower interest rate. This can make it easier to pay off your debts and can help improve your credit score by showing that you are taking steps to manage your debts responsibly.

What Credit Score Do I Need to Obtain Credit After Filing Bankruptcy?

It can be challenging to obtain a credit card or personal loans after filing for bankruptcy, as bankruptcy can significantly lower your credit score. However, it is possible to get a credit card after bankruptcy. Some credit card companies may be willing to offer credit cards to individuals who declare bankruptcy but may require a higher credit score or a higher security deposit.

What is the Exact Credit Score I Need to Obtain Credit After Personal Bankruptcy?

The exact credit score you will need to qualify for a credit card after bankruptcy depends on the credit card issuer and the credit card terms. Some credit card issuers may require a credit score of 600 or higher, while others may be willing to consider applicants with a lower credit score.

If you are considering applying for a credit card after bankruptcy, review your credit report and work to improve your credit score as much as possible. This can include paying your bills on time, reducing your credit card balances, and applying for a secured credit card. By improving your credit score and demonstrating that you are a responsible borrower, you may be able to qualify for a credit card with more favorable terms.

Shopping around and comparing different credit card offers is also a good idea to find the best option for your needs. Some credit card issuers may be more willing to work with individuals who have filed for bankruptcy, and you may be able to find a credit card with a lower credit score requirement or a lower security deposit.

By researching and comparing your options, you can find a credit card that is right for you after bankruptcy.

How Can a Bankruptcy Attorney Help After Declaring Bankruptcy?

If you have recently declared bankruptcy, you may be wondering how to move forward and rebuild your financial future. One way to do this is by working with a lawyer. 

An attorney can provide valuable assistance in the aftermath of bankruptcy, helping you to navigate the legal process and take steps to improve your credit score. Here are a few ways a lawyer can help after bankruptcy:

  • Review your bankruptcy case: An attorney can review your case and help you understand your legal rights and responsibilities. They can also help you to determine the best course of action moving forward.
  • Negotiate with creditors: A lawyer can negotiate with your creditors on your behalf, working to reduce your debts or reach a repayment agreement. This can help you to manage your debts more effectively and improve your credit score.
  • File for bankruptcy: If you are considering filing for bankruptcy, an attorney can help you to understand your options, give an overview of bankruptcy basics, review your financial documents, and help you choose the best course of action. They can also assist with the bankruptcy filing process, ensuring that your documents are complete and accurate.
  • Provide legal representation: A bankruptcy lawyer can provide legal representation and defend your rights in court if you are facing legal action related to your bankruptcy.
  • Offer guidance and support: An attorney can offer guidance and support throughout the bankruptcy process, helping you to understand your options and make informed decisions about your financial future.

Contact Ziegler Diamond Law Today

A lawyer can be a valuable resource after bankruptcy, helping you to navigate the legal process, manage your debts, and rebuild your credit score. If you are looking for assistance after declaring bankruptcy, it is worth considering working with an attorney to help you get back on track.

Contact Ziegler Diamond Law today to schedule your free initial consultation with a proven bankruptcy lawyer.

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About the Author

Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.