Although bankruptcy can be extraordinarily helpful for families who are overwhelmed with debt, many people choose not to file because they fear the effects that bankruptcy will have on their credit score. The truth is, continuing to leave your debts unpaid or even risking wage garnishment and other penalties can often be more detrimental to a credit score and a family’s overall financial situation than filing for bankruptcy.
Choosing to file bankruptcy is a difficult and personal decision, however, it is possible to rebuild your credit after filing. It takes time and effort, but it is often easier to rebuild your credit with a clean financial slate after bankruptcy than continuing to struggle with debts you can’t pay while working against the grain to clean up your credit. Here’s how you can rebuild your credit after filing for bankruptcy.
Apply for a Secured Credit Card
The key to building your credit score is to use credit responsibly. Not having any credit will not allow you to build your score after a bankruptcy, even if you have a clean financial slate and pay all of your other bills on time. Responsible use of a credit card, including only using 10-15% of your card’s total limit and paying your bill on time every month, will help you slowly raise your credit score over time.
Although you are unlikely to qualify for a traditional credit card after declaring bankruptcy, you may qualify for a secured credit card. A secured card requires a deposit and typically only extends a credit line in the amount of the deposit. The more you deposit, the more credit you will have. It’s similar to using a prepaid debit card, however, when you pay your bill on time and use only a small amount of your available credit, this is reported to the three national credit bureaus – a must if you’re trying to rebuild your credit.
Monitor Your Credit Report
One of the most important things you can do when you are rebuilding your credit is to watch your credit reports from all three credit bureaus as closely as possible. The bureaus and also outside agencies often have programs where you can check your credit report monthly, and they will notify you of any activity on your reports. However, these programs can be expensive and it is possible to monitor your credit for free if you’re watching your budget. By law, you are allowed one free credit report every year from each of the three credit monitoring bureaus.
Whether you’re paying for a credit monitoring service or are just getting your free annual reports, it’s important to look for changes to your credit report or suspicious activity. Identity theft and fraud still occurs, and it happens to people who have already filed for bankruptcy. Watch for new accounts that you didn’t open or collections activity that you didn’t know you had. By spotting these things as soon as possible, you can dispute the items early and increase the chances that those issues will be resolved quickly.
When to Contact a Texas Bankruptcy Attorney
If you’re concerned with your financial situation and are worried about how to rebuild your credit after declaring bankruptcy, you can get the help and guidance you need from a seasoned Texas bankruptcy lawyer. At the Huebner Law Firm, we understand how frustrating it is to be financially overwhelmed, and we know that now two situations are exactly the same. We can help you discover a path to financial freedom that is customized to the unique needs of your family. Whether we are helping you to determine if bankruptcy is right for you, what type of bankruptcy to file, or how to rebuild your credit and your life after declaring bankruptcy, we will give you the attention and comprehensive legal help you need. Call now for a consultation.