Recovering from personal bankruptcy

While bankruptcy does serve to help you obtain a fresh start with your debts, there may be some ramifications. Personal bankruptcy remains on your credit report for ten years, although that does not necessarily mean you won’t be approved for any credit before then.

Before you get to the point of filing for bankruptcy, chances are you’ve already been late on some payments, and your credit score will reflect that. The bankruptcy will likely bring your credit score down further.

After you file for bankruptcy, any of the loans that have been discharged should have a zero balance on your credit report. Shortly after you file for bankruptcy, you should request copies of each of your credit reports to ensure that the accounts are all reflected appropriately. If any of your accounts do show a balance and shouldn’t, you can dispute the error.

As long as the bankruptcy remains on your credit history, your score will likely be lower than average. While you still may be approved for some credit, that credit will probably be at a higher interest rate than the average rate. Be careful with taking on high-interest debt, as you won’t want to get yourself in the same situation that caused the bankruptcy.

Some consumers opt for a secured credit card to help rebuild their credit history. In addition, many consumers who plan to travel find that they absolutely need a credit card. With a secured credit card, you make a payment to the creditor that serves as collateral for the credit card. If you are interested in a secured credit card, search for reviews online and make sure you get a highly recommended card. By making payments on time, you can work to improve your credit history.

Take advantage of the ten years a Chapter 7 bankruptcy is on your account by stabilizing your financial footing and slowly rebuilding your credit history. Utilize all available resources, and build a budget that enables you to save money for an emergency fund and for the future. Then, when your credit history is on good terms, you’ll be in a great financial position. 

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

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  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.