Two Simple Steps to Rebuild Your Credit After Filing for Bankruptcy
Posted In: Litigation   | Posted by: Arenstein & Anderson Co., LPA
So you have filed bankruptcy. You should not think of it as a horrible end, but rather an opportunity to start over. The first question people usually have is: “Now that I’ve gotten rid of my debts, what can I do to re-build my credit?”
Although it sounds counter-intuitive, the best thing to do is to get a new credit card. Credit card companies will extend you a line of credit, although it will be at a higher interest rate.
In obtaining a new credit card, make sure you do two things:
1) Get a card with a small credit limit.
2) Be sure to pay it off in full every month.
A good strategy is to just use the card to purchase gas each month and then repay it in full. Doing so will show the creditors that you have the ability to handle debt responsibly and show a pattern of paying off what you spend.
There are, however, a few things to be leery of. Do not carry a balance on the credit card over to the next month. It might be easy to justify that you had some unexpected expenses and you will pay it in full the following month. This kind of thinking probably led you to file bankruptcy in the first place! Also, if you repay your credit card every month, chances are good that within a year or so, the credit card company will increase your credit limit. On the one hand, this increase can have a positive effect since the smaller the percentage of available credit that is being used, the better your credit will be. However, with an increased credit limit, the temptation exists to use that additional credit. It is important to remain disciplined in your use of credit if you want it to rebound as quickly as possible.
Filing bankruptcy will stay on your credit reports anywhere from seven to ten years depending on a lot of factors. However, good conscientious spending and debt management can improve your credit within that time period and demonstrate to the creditors that you learned your lesson and are not a poor credit risk.
Filing for bankruptcy is never an easy decision, but life often throws us a curveball, and we have to do something we never thought we would. This is okay, though. There are reasons the law provides bankruptcy protection, and at Arenstein and Andersen Co., LPA, we can help you through the process to make it as easy and as painless as possible. Below are answers to some of the most frequently asked questions about bankruptcy.
About Arenstein & Andersen Co., LPA
Arenstein & Andersen Co., LPA, located in Dublin, Ohio, provides comprehensive litigation representation services. Samplings of our bankruptcy services include: filing Chapter 7 bankruptcies for individuals and couples; filing Chapter 13 bankruptcies for individuals and couples; defending clients in post-bankruptcy challenges by creditors to the discharge of certain debts; assisting with creditors prior to, during, and after a bankruptcy is filed; and handling conversions from Chapter 7 to Chapter 13 bankruptcies and vice-versa.